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Short-Term Technical Outlook: NZD/JPY (Update)

Friday, 24 October 2008 11:32:25 GMT | David Song, Currency Analyst

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Mounting fears of a global recession paired with the lack of stability in the financial market continues to favor a bearish outlook for the NZDJPY, and may offer profitable opportunities for forex traders.

Currency Pair: NZD/JPY
Chart: 60 Min Charts
Short-Term Bias: Bearish

Analysis Update

The NZDJPY has plunged lower during the overnight Asia session to touch an intraday low of 50.08, and may fall further over the following week as the flight to safety continues to fuel bullish sentiment for the Japanese yen. As expected, the pair has filled in the gap 12/07/01, and may work its way down towards the 9/27/01 low of 47.29 in the near-term. Meanwhile the increased divergence from the 120 SMA suggests that the pair may bounce back to the upside over the next few trading sessions, which could lead the pair to move back above the 55.00 level. However, the fundamental event risks scheduled for the next 24 hours may call for a change in our outlook.

Analysis

Mounting fears of a global recession paired with the lack of stability in the financial market continues to favor a bearish outlook for the NZDJPY, and may offer profitable opportunities for forex traders. After holding with a broad range between 56.75 and 66.25 over the past two weeks, the pair recently broke below the state range, and the downward momentum should drag the pair lower over the following week. I expect the pair to work its way lower to fill in the gap on 12/07/01 in the near-term, but the divergence from the 120 SMA suggest that the kiwi-yen may bounce higher over the next few hours of trading. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.

To contact the author of this article, please email: dsong@fxcm.com

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