Hi Traders! Today I am sharing with you the NZDJPY technical analysis and forecast post. We do our analysis on the MetaTrader4 platform (MT4), some very interesting, useful tips and hacks about the MT4 platform could be found here. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club Spoiler alert – free memberships are available! Now, let’s start our analysis from the highest timeframe which will be the weekly chart here.
You can watch the video explanation of this idea here
On the weekly chart the price which is moving higher has reached a strong resistance zone where the psychological round number 80 coincides. The price respected this zone and is currently bouncing lower from this zone. We also have a bearish divergence that has formed between the first high that has formed at 79.208 and the second high that has formed at 80.179 based on the MACD indicator which we may consider as evidence of bearish pressure. 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 value over 25 which we may consider as yet another evidence of bearish pressure. Also, based on the Parabolic Sar we could see that the dots are above the price which we may consider as yet another evidence of bearish pressure. So basically I expect a possible correction to happen here in the form of double wave down. We may now move down to lower timeframe and look for evidences supporting this bearish view.
On the daily chart, we have a bearish divergence that has formed between the first high that has formed at 79.421 and the second high that has formed at 80.179 based on the MACD indicator. The price then moved lower and broke below the last low at 77.924 thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider this as evidence of bearish pressure. As per the book scenario after a bearish convergence we may expect corrections and then further continuation lower. Currently it looks like a correction is happening. So everything looks good here for the bears and we may now move down to one more timeframe lower and look for evidences supporting this bearish view.
On the H4 chart, the price which was moving lower has created a bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently it looks like a correction is happening. Also, while measuring the first wave of this correction using the Fibonacci expansion tool, we could see that the 100%(78.484) Fibonacci expansion level of this first wave coincides with a strong resistance zone which makes this area a key resistance zone for us. The price reached this key resistance zone, respected it and is moving lower from this zone. We also have a bearish divergence that has formed between the first high that has formed at 78.475 and the second high that has formed at 78.764 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line and currently it looks like a pullback is happening. We may consider these as other evidences of bearish pressure. Until the key resistance zone holds my view remains bearish here and if we get a valid breakout below the low at 77.323 we may then consider it as a validation for the bearish view and may expect the price to continue lower further.
NZDJPY W1(Weekly) Chart Analysis
NZDJPY D1(Daily) Chart Analysis
NZDJPY H4(4 Hours) Chart Analysis
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
You will also find a pretty extensive database of educational materials here in the blog – just use the search or check out the Forex Education section above.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
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