What defines a price level as a minor low for you?
To me, that 84 zone is a MAJOR level.
-It’s the most recent significant higher low which led to the most recent significant higher high print.
-Price spent about a month b/w 84 - 86, got bid up and didn’t revisit such a price until this week (about 2x as long).
-I feel this is a demand zone where bulls can re-accumulate after a nice shakeout (off the RBNZ comments). Risk still continues to prevail across the globe. If 84 gets taken out, bulls will need to be much more cautious (We’re still in an uptrend here).
The attempt on 94 (to me) looks more like profit-taking then counter-trend sellers. It corresponds w/ the end of the year, and seeing the NZDJPY is moving up, buyers need to become sellers to book profit on the year and move onto the next.
I think the markets are still trying to figure out what the hell the FED is going to do, and it’s impacting their ability to make trades elsewhere. Volatility has just been crazy these last 2 months.
Yeah, I guess technically I should say “secondary swing low”. It is nothing more than the lowest low in a swing down during a primary upward trend. It is precisely as you said: “[I]the most recent significant higher low which led to the most recent significant higher high print.[/I]” That is exactly what I am pointing out about it. And that is why I am mentioning the 200+ pips between the current price and that level. The current 3 day range is bigger than that distance, but there could be a lot of support between here and green pastures south of that for those tripping on this LSD.
This is to contrast NZD/JPY against the EUR/JPY which has already managed to break below the last secondary swing low in the previous primary upward trend.
What would be pretty would be a slide beneath the low of Oct 16th, a rally back up to it and a bounce off of it again to the south. It is entirely possible it could stay between the current level and 83.30 clear into March as it did so for a month back in October as you mentioned.
And most important: I would agree that if NZD/JPY cannot get under that 16th low before climbing back above the Dec 29th high, we are still in an upward trend.
I am betting that NZD/JPY will not hit a new 10-day high before Wednesday, February 11th. If it does I am taking my loss and getting out. If it does not I will take a profit at the next 10-day high unless it manages to get below that Oct 16th low. In which case I will consider this a primary bear trend and I will wait for a new 4 week high to get out.
Today’s low is currently another 85 pips south of yesterday’s. This opens up the 3-day price range to 355 from 270 and strikes within less than 150 pips from the Oct 16th low. Today’s range is almost exactly the distance to that low. This is a strong dive to that level perhaps indicating the bulls are all there waiting.
Where will the stops be for those bulls? My guess is just under that Feb 2, 2014 low which is just under 200 pips lower than the Oct 16th low. Perhaps the shorters will take profit between those levels from 81.50 to 83.30 and the price will form a line before a new leg lower.
Well, last night both NZD/USD and NZD/JPY moved low with a drop of about 100 pips, following the RBA rate cut: I was short before the event, and my expectation of a negative NZD reaction was confirmed, albeit I was not so sure what would have happened in the event of a rate hold, for example.
NZD/USD selling (hourly) volume between 3am and 4am was over 100m units, which was roughly the same as last Thursday, during the RBNZ rate-hold announcement… Unfortunately (for bears) the NZD attempted some recovery between Friday afternoon and Monday evening, so that the sell-off from last night brought it back only just lower than what it was on Thursday… Where do we go from here?
Well, the NZD/JPY on the daily chart is at the level of a long upward trend-line and on the monthly it is hovering just above the 25-day moving average (currently at 83.12), but these levels may mean very little if there is enough fundamental momentum to break them.
Tonight’s NZ (un)employment data release is unlikely to be earth-shattering, following the RBNZ rate-hold and statement last week, but it could still be used by money-makers to flush some stops and force the NZD value lower (or mount a recovery, if employment data should beat expectations, possibly). What can we expect from the figures? Employment has been improving but wage-growth has been very slow, so it is difficult to say what to expect in terms of a reaction; here is an article to help us gauge the situation:
NZD/JPY looks like it will close the week out well over 87.000, maybe even 87.500. That is about 90 pips below the 200-day moving average and 170 pips below the current 10-day high. If it strikes the 28th high next week, I am covering my short.
Well, all USD pairs, including the NZD/USD, moved south by over 100 pips, while NZD/JPY, for example, went the opposite way
… Why? USD/JPY led the way for all Yen pairs, therefore pulling NZD/JPY in the opposite direction of NZD/USD…
Beware: USD/JPY is a counter-intuitive pair… Risk-aversion is a real threat to the pair: when flight from failing equities and risky assets will hit the markets, the USD will benefit but USD/JPY will fall. What we saw on Friday’s USD/JPY is not a risk-on, ‘carry’ trade, but, in the lack of any risk-aversion or Yen-appreciation theme, it just followed the US good news enthusiasm…
That is my explanation for it… However, NZD/JPY has not risen back above the 0.78 level, which is now poised as a supply level, and the downtrend is still looking strong. Next week we may see a resumption of the NZD/USD and NZD/JPY positive correlation, past the temporary swell driven by the USD/JPY.
