I’m seeing another potential correction play on a yen pair, and it looks like NZ fundamentals line up with this NZD/JPY short setup. Take a look!
Short NZD/JPY Idea
The Kiwi took a huge hit earlier this week when New Zealand’s Treasury released their pre-election fiscal update and announced downgrades on their growth forecasts. At the same time, the pickup in risk aversion and anti-USD action has favored the lower-yielding Japanese yen.
I’m seeing a short-term descending channel on NZD/JPY’s 1-hour time frame and price seems due for a bounce back to the resistance. Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level lines up with the channel resistance and a former support area.
Stochastic still seems to be heading north so the pair might follow suit, but the oscillator also appears ready to head back down. A smaller correction could last until the mid-channel area of interest near the 38.2% Fib and 79.00 mark.I haven’t set any actual entry orders yet since I plan on watching how price action unfolds during the Jackson Hole Symposium. Besides, it’s almost the weekend and I think profit-taking might come into play at some point. I’m also wary about potential weekend gaps, given how market sentiment has been driven mostly by headlines in the past few days.
With that, I’m waiting until early next week to set any sell orders, possibly at the very top of the channel or halfway through. For now, I’ll keep my one good eye on my EUR/JPY setup that’s closing in on my ideal entry area. See you around!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.