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Forex: Ideas You Can Trade - NZDJPY Support Near 87.40 Tested Again

Posted by Steven Hatzakis on May 16, 2014 8:50:00 AM

NZDJPY:  While support is being tested downward pressure could push towards 87.19

The daily candle chart below shows the price history of New Zealand dollar (NZD) versus the Japanese yen (JPY). This currency pair is known as NZDJPY, and is trading near 87.61 around time of publication - after making a low near 87.40 for the second consecutive day.   

In the last post about NZDJPY, the price of 87.42 was discussed as a horizontal support line after the pair was exiting a bullish channel that it eventually failed to regain since - except for only briefly at the start of May.

Since that high of May 6th, the pair has since made its third test today on near 87.40, with today's low of 87.46 just a few pips away.

If 87.40 is breached, then 87.19 could be the next step, whereas if support holds near the low of the last two days, then a recovery could follow - albeit a brief one.

Below are examples of a how to trade a bearish continuation or a bullish reversal:

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 88.45 with a Limit to take profit @ 88.98 and a stop-loss @ 88.11 Risk/Reward Summary:  Limit risk = +53 pips profit / (-34)  Stop-loss risk = Gain to Loss ratio = 1.55

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 87.38 with a Limit to take profit @ 87.17 and a stop-loss @ 87.59 Risk/Reward Summary:  Limit risk = +21 pips profit / (-21) Stop-loss risk = Gain to Loss Ratio = 1.00

Medium term daily candle chart:

 nzdjpydaily may 16 2014 note

 

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