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Momentum remains strong to the downside on NZD/JPY after a break of the strong support around 81.00. Does it still have legs in the short-term?

NZD/JPY Trade Setup

NZD/JPY 4-Hour Forex Chart
NZD/JPY 4-Hour Forex Chart

This is mainly a technical play that seems to be in a strong sell mode, likely after the RBNZ states their intent to stay accommodative in their monetary policy meeting this week and possibly on some risk-off vibes around a plethora of headlines going on now, including Shinzo Abe’s real estate scandal, the London attack, and the “Trumpcare” vote that was supposed to take place today, but rescheduled.

Whatever the case may be for NZD/JPY’s recent sell-off, I don’t see much ahead from New Zealand or Japan that could derailed this short-term move, and if the market bounces in the next few sessions, I’m looking to play this downtrend at a better price. I’ll be using a two day ATR stop to give me room to breath, and my target will be the top of 2016 range that is quickly approaching, for an acceptable short-term reward-to-risk ratio.  Here’s what I’m doing:

Short half position of NZD/JPY at 79.00, max stop loss at 80.50, max target at 77.00 for a potential 1.33:1 return-on-risk. I’ll be risking only 0.5% of my account on this position and I’ll look to re-assess to potentially reduce my risk and maximize my gain if I’m triggered and the market still has strong downward momentum around 77.00.

As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

Risk Disclosure
Pipcrawler’s Q4 2016 Blog Trading Performance

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