Matt Simpson, CFTe, MSTA
CityIndex
Now we have retraced to the neckline I wanted to update the analysis to help your trading plans ahead.
As much as I would like it to be, traditional Technical Analysis is rarely accurate as some textbooks suggests. Therefor as trader we need to allow for 'noise' around key levels and the neckline on the Head & Shoulders pattern is a great example.
For example, we'll probably see intraday spike up and around this key level, only to see it crash down at a later date after stopping traders out who had stops too close to volatile market action.
A break above the neckline may provide adequate opportunities to trade long on lower timeframes, but for this we need to see weakness from US data which we are just not seeing yet. Keep in mind that Friday we have Nonfarm Payroll and Manufacturing data, which is strong for US (and therefor weak for JPY) we may see upside for NZDJPY.
Conversely if we see any weakness from US data on Friday this this should be JPY strength and help push NZDJPY below key levels. I also suspect at this stage that RNZ will continue to sell their own currency, making any upside should be limited for NZDJPY (and other NZD crosses) before returning to their downwards path.
Therefore I would prefer to continue seeking bearish setups below key levels, and stand aside on any NZD retracement moves.
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