NZD/JPY Outlook: New Zealand Dollar Decline Resuming?
NZD/JPY TRADING Strategy: BEARISH
- New Zealand Dollar may be ready to resume downtrend vs Yen
- Negative RSI divergence hints at topping near the 70.00 figure
- Long-term chart setup implies cope for substantial losses ahead
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The New Zealand Dollar may be preparing to resume the downtrend started in December 2018 against the Japanese Yen. Acute negative RSI divergence has emerged on a test of support-turned-resistance in the 69.69-70.27 area, warning of ebbing upward momentum. This might prove to mark a swing top.
In order to be actionable, the setup needs to be confirmed with a break below rising trend support guiding the Kiwi Dollar’s latest upswing through October. A daily close below that would set the stage to retest the 66.67-94 support shelf. Invalidating bearish cues needs a close above falling trend resistance, now at 71.19.
A look at the weekly chart suggests ample scope for downside progress. NZD/JPY broke a nine-year uptrend in mid-2018. That has been followed by a decline that most recently cleared long-standing resistance-turned-support in the 68.89-69.72 region.
The way forward may be choppy from here if prices’ last foray into this area – from October 2009 to December 2012 – is any indication. Nevertheless, the bias seems decidedly bearish, with relatively little heavy-duty support on the horizon until are within striking distance of the 60.00 threshold.
Weekly NZD/JPY chart created with TradingView
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.