Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
Practice trading with a demo account
In this video, we’re going to take a look at NZD/JPY as it has broken through major support and could be on its way down further.
So, we’ve been talking about Kiwi selling off for a while now. I think we’ve been speaking about it since at least the end of July. This was largely due to the strength and weakness analysis that we do, paired with the commitment of trader reports, which was showing us that the commercials were holding quite a large short position on the Kiwi Dollar. They saw that the market was overvalued, so they were looking to offload some Kiwi Dollar. So, what they’ll do is they’ll short as the price moves to the upside, and then usually,, we see that follow-through eventually, and that’s what we’re seeing, here, now.
So I’m looking at this from a weekly point of view and seeing where price could potentially go, and the previous low is here, around that 68 area. I’m expecting the price to potentially come down into this weekly low, through here.
So, what can we do? Well, first of all, we needed the price to start trending lower, and we can see here that we have this really nice head and shoulders pattern, and the market has now broken, and it’s looking to close below those lows.
Obviously, there is a lot of time left in the day, this could completely change or become a bullish candlestick. But, what we want to see or I want to see in terms of looking to short this market is a nice bearish daily close. Once I get that bearish daily close, it signifies that the price could be on its way to the downside. What I would be looking for the next day is a minor pullback with an extension to the downside.
So, if I go take a look at the four-hour timeframe. What is the four-hour trend where we can see that the four-hour has recently been consolidating and is now also broken into new lows? If we were to say that the market closed as it did now, I’d be looking for the price to pull back into this breakout zone and then look for a continuation to the downside.
If I were to go to a 15-minute chart, you’ll be able to see that trend really nicely today as the day has moved lower.
If I press ctrl-y on my keyboard a MetaTrader5, you’ll bring up the session breaks so you can see midnight to midnight. So you can see the whole 24-hour day, and we can see, here, it’s been trending down nicely throughout the day.
So I’m expecting that to continue. If we were to get that daily bearish close, expect further downside on the Kiwi Dollar. Especially against the JP Yen, here, as our example. Break below these lows, through here. And we’ll be on our way to that key-weekly support zone.
Thanks for watching, and I’ll catch you on the next video.
You can practice trading NZD/JPY on our platform by opening a free demo account. If you’ve already signed up, you can get into the trading game for as little as $100 funding in your account.