I’m bummed out about hesitating to short this pair when I saw a break-and-retest situation on its daily time frame, but I think I may still have another chance to catch the selloff.
NZD/JPY Trade Idea
You see, I was watching this confluence on the pair’s longer-term chart earlier this month when New Zealand printed weaker than expected quarterly CPI.
Fast forward a couple of weeks later and the pair has dipped below the 78.00 mark! I do wish I had hopped in back then, but I also did mention that I’m waiting for a bit more bearish confirmation.
Zooming in to the 1-hour chart now, I’m seeing a new descending channel forming and price is making a weak attempt to climb back to the channel resistance around the 79.00 handle.
I’m keeping a bullish yen bias mostly because of stronger tightening expectations, particularly from the FOMC and BOE earlier this week. This could dampen business and consumer activity, which would translate to weaker demand for commodities and risk aversion.
However, the Kiwi is drawing a bit of support from upbeat PPI readings and slightly higher inflation expectations. Quarterly retail sales data are also up for release, which could mean more volatility for this pair.
Because of that, I’m refraining from setting entry orders ahead of time as I plan to watch the events unfold and to see how the channel resistance holds up.
I’m keeping my one good eye on the 79.00-79.25 area to see if it keeps gains in check and I’ll be setting a wide target at the daily swing low if I’m able to short. Who’s with me?
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