I don’t know if you’ve heard about the Huck Loves Her Bucks (HLHB) System, but it’s one that I use to track trends for the major dollar pairs.
Good trends aren’t confined to dollar pairs, though, which is why I’m looking at NZD/JPY’s simple trend line play today.
What do you think of this setup?
A surprise contraction of New Zealand’s Q4 GDP brought the bears to the Kiwi’s yard yesterday. After all, it’s also likely that growth is negative in Q1, and that would mean the R-word (read: recession) for New Zealand. Yikes!
Fortunately for the bulls, Finance Minister Grant Robertson isn’t too worried. He says that the economy is still doing well compared to its peers and that it’s normal to see numbers “jumping around” when global economies are dealing with a pandemic.
Meanwhile, the Bank of Japan (BOJ) just scrapped its 6 trillion JPY minimum for annual ETF purchases and widened its yield curve band allowance as markets had expected.The central bank only widened its band from 20 to 25 basis points on either side, though, which is a bit tighter than the 30-basis point allowance that some had priced in. This suggests that the BOJ isn’t quite ready to allow government bond yields to go cray and likely push the yen higher.
Will traders eventually return to buying the Kiwi against the yen? NZD/JPY is hanging around the 78.00 levels that’s near the 100 SMA and a trend line support that Kiwi bulls have been relying on since the start of the year.
A long trade to the 79.00 previous highs sounds like a good idea especially if I place my stops just below the 100 SMA and the trend line.
If NZD/JPY starts breaking below the trend line, though, then I’ll be ready to switch biases and target potential inflection points near the 200 SMA and 76.00 previous support area.
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