NZDJPY offers good risk/reward If the set up completes.

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With the medium-term outlook in NZDUSD still offering a mild downward bias, NZDJPY offers good risk/reward If the set up completes.

 

Weekly:  After a strong rally from Q4 2017 the cross has consolidated for the last four weeks. The close of this week’s candle will be important. A low close (below 80.00) and we have a bearish outside bar. This should lead to more downside movement towards the trend of higher lows at 76.30

 

Daily: Although we have broken the trend of lower highs, price action has formed an Evening Star. This often highlights the top of as trend.

 

Intraday (four hour) – Two scenarios:

1. We move directly down to the 261.8% extension at 79.44 from 81.56-80.75. With bespoke support at 79.32, I think we will bounce from here and be able to gain a better short entry near 80.50
2. We consolidate a move towards previous resistance at 81.30, this in turn making a right shoulder of a bearish head and shoulders pattern.

 

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