Today at around lunchtime (about 1 hour ago) I entered a short trade in NZD/JPY. This was due to a bounce at an upper trendline (ie. resistance) which will now hopefully force the price down.
Observe the following chart:
The black line indicates the downwards pointing trendline that the price has hit and started moving away from. That is the basis for this TA. The main supporting indicaor is in this case the stochastics indicator which seems to me to be pretty consecutive in indicating trendline bounces. Just like at the two prior peaks the stochastics has moved above and then back below the 80 value which indicates a downturn, especially when coupled with a trendline hit and a short-term downwards trend.
Also the price just crossed below both the 200 and 50 moving averages, both considered strong supports.
The only indicator going against this prediction is the MACD. As you can see it has broken its trendline and has reached a higher peak than the previous one, which should indicate a strengthening price. I however decided that the reliability of the stochastics is stronger in this case.
I entered this trade at 85.67 and placed a stop-loss right above 87.20 (the latest pivot point). This is quite a big stop but the NZD/JPY is pretty volatile so it needs to be. Since the setup is akin to a downwards sloping channel, I will make my price target right below the latest dip, right above 80.00.
Like always I will follow up with regular updates and more trades.
A quick update on the other active EUR/USD trade perhaps? Well so far it has been moving in the right direction although it has been very volatile. The trade is about 40 pips in the positives right now, but it changes every second so I will be back tomorrow for another update.
Good trading,
/H
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