3 Intriguing PAST NZDJPY Charts - 24-May-16

3 Intriguing PAST NZDJPY Charts – 24-May-16

Hi there PAST Traders,

I hope you’re all keeping well!

In this report I’m going to update you on NZDJPY. It’s a pair that I’ve been speaking about now and again in the Pro Workshops, and it’s one that I have been keeping an eye on.

Here are 3 interesting charts that caught my eye:

1 – The first chart is one that I’ve been watching since last December. Late last year, I was browsing the yearly charts to see if I could see any clues as to what might happen in 2016. And I noticed that the yearly candle of 2015 had just completed a Strong Reversal Candle on NZDJPY.

3 Intriguing PAST NZDJPY Charts - 24-May-16 - image 1

Now, as we all know, the Yen got off to a flying start in 2016. And I’ve managed to take advantage of that Yen strength with short positions in USDJPY, GBPJPY and EURJPY (which is still open).

An interesting aspect of this yearly NZDJPY chart is that it’s coming into the area that would be the traditional entry point if we were trading this yearly reversal candle. That traditional entry point would be a break of the low of 2015. I’ve marked it on the chart for you in blue.

Many traditional trading candlestick traders tell us to wait for a break of the low for “confirmation”. I rarely bother to wait for confirmation, but I do think that if NZDJPY could break that level, it could begin to accelerate to the downside.

Of course nothing is certain, but there’s a chance it could happen – and that’s enough to get me interested!

2 – To get a look at the second interesting chart on NZDJPY, we have to fire up the monthly timeframe.

3 Intriguing PAST NZDJPY Charts - 24-May-16 - image 2

As you can see above, price seems to be putting a bit of downward pressure on this long-term trendline, going back to the lows of 2008. It’s hard to tell for certain if it is broken yet or not, but one thing’s for certain – it’s definitely under attack from the bears.

3 – The third interesting chart on NZDJPY that I have for you is from the 4 hour timeframe.

3 Intriguing PAST NZDJPY Charts - 24-May-16 - image 3

Yesterday I noticed this trendline breaking down and jumped in with a short entry at 74.15.

If you follow me on Twitter (@npricefx) you might have seen me document the entry in real time.

My stop was 15 pips from my entry, just at the low of the previous candle marked on the 4 hour chart above (red line).

In stark contrast to how slowly trendlines have been breaking lately, this one was a peach. Price broke down nice and fast, and within a few hours had given me the thumbs-up to bring my stop to breakeven and get risk off the table.

So what’s next?

Well, we wait, don’t we?

“It was never my thinking that made the big money for me, it always was sitting.”

– Jesse Livermore

The most likely thing to happen is that price retraces now and takes out my breakeven stop. If that happens, I’ll just continue looking for the next entry. I’ll have lost nothing, and that’s always my first priority in trading.

But…

There is also a chance that this trade could be in right at the start of a significant monthly trendline break.

There’s also a chance that this trade could be in just before the point where a significant portion of the trading community call the 8 year bull market in NZDJPY as dead (break of the 2015 low).

There is only a small chance that this is the case, granted.

But my risk is zero. And the potential reward is big. Very big.

And so when you are presented with opportunities, where risk is tiny, and potential reward is huge, you have to take them.

Let’s see what happens!

All the best,

Nigel

PS: If my open trade at 74.15 does get taken out at breakeven, I’ll continue to look for opportunities to short on retraces back up to the underside of the orange trendline on the 4 hour chart. If price gets above that trendline, I’ll stand aside.

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DISCLAIMER & COPYRIGHT

This update is based on my analysis on my charting package. It may differ to yours as it can be affected by time, market movements, charting packages and broker prices. I accept no liability for loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on any information in this report or analysis.