Not long after posting this trade plan Bank of Japan threw an almighty spanner in the works.
The original analysis called for signs of weakness below neckline of a weekly Head and Shoulders reversal, to consider this week for short trades in line with the bearish momentum. Within hours (maybe even minus) of this post the neckline was completely obliterated by the Bank of Japan’s talk of further QE, seeing the Japanese Yen plummet to a 13-year low and weaker across the board against all Majors.
Now trading at a 6-week high, momentum now clearly favours bullish positions but caution needs to be taken as we approach previous resistance levels. With last week seeing a gain of over 3% I suspect that if we do see any pullback within last week’s range, it is likely to be shallow.
Intraday charts present potential for a bullish flag to form with a support zone between 86.70 to 87.10 providing potential for buy setups.
In the event of a deeper pullback then support down to 86 could be considered for bullish setups, although at this stage I suspect the upper support zone should hold.
Initial target is around 88.60 highs and 88.65.
Wednesday may provide the catalyst for NZDJPY as we have unemployment and GDT prices.