NZD/JPY is currently finding resistance at the top of a rising wedge pattern visible on the pair’s daily time frame. A shorter-term head and shoulders pattern can be seen, with a breakdown from the neckline still pending.
A break below the consolidation pattern could lead to more losses for the pair, perhaps a selloff until the bottom of the wedge near the 84.50 minor psychological support. For now though, the 88.00 major psychological level is holding as a floor. Stochastic is still moving down, indicating that Kiwi bears are in control.
Shorting below 88.00 with a stop above the top of the wedge and a target of 84.50 could yield roughly a 2:1 return on risk.
By Kate Curtis from Trader’s Way