NZDJPY: Is Key Support On The Ropes ?

NZD/JPY – Charts & Analysis

As of writing: Strength Vs Weakness Tables Standings

• NZD is showing W1 (Weak) and W2 on the Trend and Day trading tables respectively
• JPY is showing S3 (Strong) and S1 on the Trend and Day trading tables respectively

Link to LIVE/Rolling Strong/Weak Tables HERE

Observations:

• The chart above shows a solid rally from
  • Prior July ’21 support circa 75.50
  • Through the Oct/Nov ’21 82.00 high
  • Through the Dec ’16/Jan ’17 83.50 resistance handle
  • To set a rally high of 87.00
• Price has then retraced back to 83.50, now support
• 83.50 has then breached, price retraces back to 82.00, now support
• Throughout the 87.00 to 82.00 retracement we see price form a confirmed bear trend, the associated channel has yet to be proven
• On the daily chart the 82.00 support level has yet to either hold or fail
• ADX: We see sellers regain control as buyer trend strength is seen to wane
• Stochastics: Seen remaining very much in oversold territory

Observations:

• On the 8 Hour chart above we again acknowledge 82.00 support, this time noting 4 bars in contact with this level, lending support to the significance of this handle
• We also note the confirmed bullish trend line beneath, anchored Oct ’20, formed Feb ’22 and tested a further 3 times in the same month
• A bearish Fibonacci Retracement has been added to this timeframe
• ADX: Again we see sellers in control, trend strength seen rising through the 25 handle
• Stochastics: Stochastic is somewhat more sensitive, particularly on the lower timeframes, and here we see it showing buyers regaining control with an uptick in both %K & %D at 38 over 33 respectively. This would indicate buyers have regained control on this lower timeframe.

Current Narrative:

• The current narrative appears, overall, to be to the downside, with sellers in control of the daily chart, testing the 82.00 handle
• The market appears to acknowledge the significance of the 82.00 as on the 8Hr chart we see price stall at this level.
• Given the divergence between the 8Hr ADX and Stochastics I have added a bearish Fibonacci retracement tool, anchored at the 84.81 high and formed to the 81.62 low
• This Fib shows a 38% retracement level circa 82.85

My Trade Plan:

• I’ll be waiting for a test of the 38 Fib level
• Should this test materialise I’ll be
  • Entering short circa 82.50
  • With a T1 target circa 81.75 (Fib 0% retracement)
  • And a T2 target on approach to the Bullish trendline, 25 points above projected contact

Strength/Weakness Caveat:

• A removal of either of these currencies from my S/W Trading Tables (HERE) would of course negate this entire trade plan