Hey guys! We’re not exactly seeing explosive moves for the majors so I thought I should take a peek at other currency pairs.
Today I spotted a pullback opportunity on NZD/JPY’s 4-hour chart.
Are you seeing this setup too?
NZD/JPY’s months-long uptrend hit the big 80.00 major psychological handle two weeks ago but the bears managed to defend the level.
The pair is now at the 78.75 area, which is near the unbroken trend line support as well as the SMAs on the 4-hour time frame.
As extended as its rally is, I think there’s still room for the Kiwi to gain more pips against the yen.
For one thing, traders are still pricing in the easing of restrictions in major global economies. This includes New Zealand, which will soon end its restrictions in Victoria.
Unless next week’s FOMC statements spook traders from taking risks on comdolls like the Kiwi, then NZD/JPY may extend its rally.
I’m waiting for a bit of momentum before I pull the trigger on my long orders. The 80.00 zone is a good profit target area, but I’m not discounting stronger-than-expected NZD/JPY performance in the next few weeks.
Of course, it’s possible that the Fed would hint at tapering or tightening next week. Thanks to yesterday’s much faster-than-expected U.S. CPI data, there is now more pressure on the Fed to reconsider its high-inflation-is-temporary story.
If the Fed hints at tapering and traders flee from risky assets, then NZD/JPY could finally break below its trend line support and revisit areas of interest like 77.80 or 76.75.
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