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NZD/JPY Approaching 67.30 Resistance

Last updated 9/23/2009 1:07 PM EST (GMT -5) 7 Comments

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FX360 Technical Analyst Staff

Technical Analyst, GFT

A potential NZD/JPY selling opportunity emerging based on a daily bearish Butterfly pattern projected to complete near 61.8% weekly resistance near 67.30.This convergence adds to the odds of at least a temporary bearish market reversal  thus providing a higher probability sell opportunity if prices climb to pattern completion near point D based on the following Fibonacci confluence...

Trade Invalidation

Prices must rally to the projected entry at 67.26 without first moving below point C (56.86), which negates pattern structure. If the low at point C holds, any gaps and/or wide-ranging candles (2-3x's average) prior to the projected entry increase the odds of pattern failure in which a move up to the 127.2% ABCD extesnion (near 70.50) or 161.8% ABCD extesnion (near 73.50-74.0) may be in progress.

Stops and Profit Targets

Assuming there are no warning signs prior to entry, stops will be set at 68.30 leaving some room above the 200% XA extension near the 68.00 handle . The initial profit target of 63.84 (T1) represents 38.2% of the projected CD leg at which point stops will be moved to break even. A final target of 61.30 (T2) sits just above 61.8% of CD.

Potential strategy: Sell if prices rally to 67.26 with stop-loss at 68.30 targeting 63.84 (T1), 61.30 (T2).

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Comments (7)

TWago

October 01, 2009 at 09:36 PM ET

Roger,
This trade was relatively close to the entry point on a daily chart and has now reached T1.
Is this trade still valid?
Tahnks!

rstojsic

October 15, 2009 at 10:22 AM ET

hi twago, yes, this trade is valid and now is in progress. (sry for delay but just saw your question now)

juanflorez

October 15, 2009 at 08:17 AM ET

Hi Everybody,
I waited for confirmation, it climbed to the 685 (67.32) and then fell \o/ looks like a valid trade by now, I am in at 67.185 (a couple of pips for extra safety :D )
any way I will move my stop loss before the Asian session....

Roger, what do you think?

J-

rstojsic

October 15, 2009 at 10:19 AM ET

sry juan, I think I'm a little confused :) ...what is your question exactly? (what do I think about what exactly?)

juanflorez

October 15, 2009 at 04:00 PM ET

Hi Roger,
Thanks for the analysis,
My question is:
"are there any signs that may tell us to lower our stop loss? (may be locking gains, or miniizing lost) in this trade?
maybe after it goes bellow the support at 66.65? or before a fundamental in the asian session?
Or do you see this like the kind of trade that will just break out one way or another?

rstojsic

October 15, 2009 at 05:03 PM ET

excellent question....check out today's feature/update on this trade ( http://www.fx360.com/commentary/roger/2147/trade-update-nzdjpy-short-finally-hits.aspx?num=1255637619992 ).

juanflorez

October 15, 2009 at 08:19 AM ET

"685" meant was "61.85 %" (typo)
J-

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