NZD/JPY dips - not astrology but sheer research, targets 79.275

FX_IDC:NZDJPY   New Zealand Dollar / Japanese Yen
The pair rallied from 75.181 to 82.688, but does not manage to sustain previous crucial supports at 80.250 or 80.150 regions.

The formation of bearish patterns like hanging man and doji candles at 81.648 and 81.923 levels on weekly and daily charts respectively still signifies weakness at current juncture.

The RSI oscillator is clearly converging to the price dips this would also mean that selling pressures are piling up.

Subsequently, a clear %D crossover above 80's strengthens bears interests in the market, as a result we've seen weekly lows at 79.623 which is attempting to slip below 10DMA which is again one more bearish indication. However, closing basis should be closely monitored.

Before proceeding further we would urge you to go through our previous write up on the below link:


Now please be informed that the dips from then 81.440 to the current levels of 79.750 are just the mere effects of above explained bearish pattern .

For now the pair has breached important support zones of 80.250 and 80.150 on the daily charts which have not been able to break this level quite a lot times in the recent past (see circled areas for price valuation on historical evidences). We believe this has exposed the pair to head towards 79.275.

None offers shorting chances quite often but NZD/JPY does – time for capitalizing again on shorts in combination

We’ve been observing consistent price drop last Wednesday previous to which the puzzling trend in this pair was sideways and certainly not an uptrend.

Any abrupt upswings can be utilized by constructing put ladders so as to present leveraging effects in profitability.

As a result, we've already advocated put ladders, but for now we like to short 1 lot of OTM call + 2 lots of ATM put longs are suggested so as to replicate the swing trading but the position derives exponential returns.

What is good sign for put option writers is that prices remained sideways or slightly swinging southwards (see daily technical charts), while the pair is likely to perceive IV closer to 13% which is on higher side.

What we could now foresee is that the time for those active long positions in ATM puts with longer tenors, and on the flip side OTM short calls would enhance profitability even though some abrupt minor rallies are expected.

Here are the ways in which one can build and develop fresh put ladders regardless of swings.

For now instead of shorting in the money contracts in the strategy prefer OTM instruments as the pair has already dropped a bit.

If you add ITM puts on short side then they may be at risk of exercise, but those who've already deployed ITM shorts in the recent past, you have nothing worry about this now as they've expired worthless.


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