Hi Traders! NZDJPY short term forecast follow up and update is here. On January 26th I shared this “NZDJPY Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, we could see that the price which was moving lower has created a bearish trend pattern in the form of three lower highs, and lower lows we may consider this as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then a further continuation lower. Currently, it looks like the correction that we are looking for is happening. In addition to this, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads a value over 25 which we may consider as yet another evidence of bearish pressure. Also, we have two key resistance zones that have formed. The first key resistance zone is formed by the 100%(84.741) Fibonacci expansion level of the first wave and the 100%(85.461) Fibonacci expansion level of the second wave. The second key resistance zone is formed by the 161.8%(86.965) Fibonacci expansion level of the first wave and the 161.8%(87.719) Fibonacci expansion level of the second wave. Until both these key resistance zones hold my short-term view remains bearish here and I expect the price to move lower further.
NZDJPY H4(4 Hour) Chart Current Scenario
In NZDJPY my short-term view was bearish here based on the above-mentioned analysis and I was expecting the price to move lower further until the two key resistance zones hold. After the bearish trend pattern, the pullback that I was looking for happened and the price which was moving higher reached the first key resistance zone. The price then moved lower and delivered 230+ pips move to the downside. The price then moved higher, reached the first key resistance zone again, respected it and again it moved lower from this zone and delivered 400+ pips move to the downside as you can see in the image below!
On the H1 chart, the market provided us with various facts supporting the bearish view. The price which was moving higher created a bearish divergence between the first high formed at 84.473 and the second high which formed at 85.207 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further after that and provided an excellent move to the downside!
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us with the majority of the time and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions accordingly.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
