NZDJPY: Bullish Momentum Has Brought Pair Close to Resistance Just Under 90.00
The daily candle chart below shows the medium term price history of New Zealand dollar (NZD) versus the Japanese yen (JPY). This currency pair is known as NZDJPY, and is trading near 89.57 around time of publication today.
The high for today is still one pip lower than yesterday's high of 89.67, yet the bullish momentum appears to have NZDJPY on a trajectory to hit the year-to-date high of 89.90 was reached on April 1 2014.
Last time this pair was reviewed in the Ideas You Can Trade series, resistance was building on a short term bearish line, but that line had since failed to prevent further upside, and NZDJPY has subsequently traded higher towards current levels.
If the high reached in April which is barely 40 pips away -can be overcome - the bullish momentum should continue to push for a new high, while if resistance on 89.90 holds - it could be enough for a reversal - where the pair may look to pivot on several of the bullish support lines just below current prices before testing higher again.
Below are examples of a how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 89.92 with a Limit to take profit @ 90.20 and a stop-loss @ 89.74 Risk/Reward Summary: Limit risk = +28 pips profit / (-18) Stop-loss risk = Gain to Loss ratio = 1.55
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 89.35 with a Limit to take profit @ 89.01 and a stop-loss @ 89.54 Risk/Reward Summary: Limit risk = +34 pips profit / (-19) Stop-loss risk = Gain to Loss Ratio = 1.78
Medium term daily candle chart: