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NZDJPY Trading Strategy
Global markets were largely affected by weak economic slowdown in China. The PBOC weak yuan fix only accelerated the reaction in the Foreign Exchange (Forex) market, forcing safe-haven flows into gold and the Japanese yen (JPY). The turmoil continued in today’s session on reports North Korea conducted a nuclear test, which provided us with an entry in multiple currency pairs.
NZDJPY Weekly Chart
Please click on the chart to enlarge:
NZDJPY Weekly Chart 06/01/16
As we emailed yesterday we were anticipating another leg lower in NZDJPY before a reversal takes place. Although this is a weekly entry we are anticipating the chart to affirm a reversed Head-And-Shoulders (H&S) and close above the support (in pink) by the end of the week. NZDJPY may re-test the 50%, which is why the protective stop is layered beneath the 50% level. The main focus will be on the PBOC yuan fix as the market would like to see whether the central bank will resume its currency devaluation. Further devaluation will not act in favour of a long trade in NZDJPY but we are relying on the technical end of the market.
NZDJPY Trade Alert Details
NZDJPY long at market price (78.69)
Take profit: 83.00
Protective stop: 77.36
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 21 days
NZDJPY triggered the protective stop loss order of the long trade, resulting in a loss.
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