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NZDJPY Tests Ichimoku – Kiwi Trading Strategies


Sep.21.2016

NZDJPY Tests Ichimoku

After a massive drop on Wednesday's BoJ statement, NZDJPY tests Ichimoku and plays with traders hearts. How could market sentiment change in the coming days? Read on for an Invest Diva style trading strategy. Join me on my LIVE and FREE webinar on Thursday at 5 PM GMT to discuss more Kiwi.

NZDJPY Tests Ichimoku - Kiana Danial with Orbex NZDJPY Tests Ichimoku - Kiana Danial with Orbex

 

NZDJPY Tests Ichimoku - Technical Analysis

Medium Time Frame

the NZD/JPY pair is testing the very thin Ichimoku cloud and the lower band of a symmetrical triangle as it consolidates between 75.75 and 71.50.

 

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Medium-term pivot levels are set at 73.45 which is the lower band of Ichimoku, and 72.50 which is a previous support.

NZDJPY Tests Ichimoku - Technical Analysis NZDJPY Tests Ichimoku - Technical Analysis

 

 

Long Time Frame

On the monthly chart too, NZDJPY tests Ichimoku cloud lower band in June, and currently is finding its way within the very thick cloud. The new Saucer-Top cycle seem to be in the middle of its formation. So a break below the Ichimoku cloud of either monthly or daily charts could open doors for further drops towards 76% Fibonacci level at 66.60.

NZDJPY Tests Ichimoku - Technical Analysis on Monthly Chart NZDJPY Tests Ichimoku - Technical Analysis on Monthly Chart

 

NZDJPY Tests Ichimoku - Fundamental Analysis

BoJ Statement Takeaways

Bank of Japan (BOJ) Governor Haruhiko Kuroda said on Wednesday that the central bank wants to keep the yield on the 10-year government bond at zero and will adjust its bond purchases to secure that goal.

For the past three and a half years BOJ has been buying a ton of quantities of bonds; It has drenched Japan's economy with liquidity in an effort  bring inflation to its 2 percent target. But unfortunately, FAIL.

Inflation did surge in 2013 and 2014. The nationwide consumer price index (CPI) reached 3.7 percent in May 2014. But that was mostly due to the 60 percent devaluation of the yen engineered by the then new Abe government and the BOJ.

This exchange rate manipulation, while successful in the short term had almost no effect on the underlying rate of inflation in the Japanese economy. Once the initial impact of higher import prices waned inflation subsided. By April 2015 annual CPI was back at 1.0 percent and in 16 months, in September 2015, it was again at zero.

BOJ Won't Give Up!

In a section that was labeled as “Possible options for additional easing,” the BOJ listed down some possible new tricks for the future:

  • Cut the short-term policy interest rate
  • Cut the target level of the long-term interest rate
  • Accelerate the expansion of the monetary base
  • Expand asset purchases

But until then, Mr. Yen's strength might continue until the technical cycle is over.

More on the Economic Calendar...

Thursday: US Initial Jobless Claims will potentially create more volatility in the USD crosses at 12:30 PM GMT, in case it comes in worse than the 261k expected. Later Euro-Zone Consumer Confidence is set to be out at 2 PM GMT, the same time the US CB Leading Index is out. EIA Natural Gas Storage Change is scheduled for 2:30 PM GMT.

 

 

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Friday:

On Friday During the Asian session Japan will release their All Industry Activity Index at 4:30 AM GMT, and moving forward during the London session we are expecting French Flash Manufacturing PMI at 7 AM GMT. German Flash Manufacturing PMI is out next at 7:30 AM followed by Eurozone Manufacturing PMI  at 8 AM to shake up the EUR crosses. All eyes will be on Canada during the New York session as they release their Consumer Price Index  at 12:30 PM GMT. The US will release their set of Flash Manufacturing PMI at 1:45 PM to end the trading week

Don’t forget to join me for a free webinar on Thursday as I cover Kiwi Trading Strategies, LIVE.

 

NZDJPY Tests Ichimoku - Trading Strategy

Step one: Calculate your  risk tolerance.

Step two: Pick a scenario that best matches your risk tolerance.

Bearish Scenario

Aggressive to moderately aggressive traders wait for a confirmation of a break below 73.45 to target 71.50 and 69.50.

Moderate to conservative traders target 72.50

Fundamentally we need...: No manupilation from BOJ. Worse than expected New Zealand economic data.

 

Bullish Scenario

Aggressive to moderately aggressive traders wait for a confirmation of a break above Ichimoku cloud and target 75.75 or 80 in extension

Fundamentally we need...: Manupilation from BOJ. Better than expected New Zealand economic data.

You can target either levels of support or resistance stated below based on your RISK TOLERANCE.

Here are Invest Diva's calculations for important NZD/JPY approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
69.50 72.50 75.75
71.50 73.45 80

 

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 xoxo

Kiana 喜愛成
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