NZD/JPY – Lower Prices Likely Ahead for Kiwi Against the Japanese Yen
- NZD/JPY February horizontal pattern breaking
- Levels to watch on further weakness
NZD/JPY has been stuck in an unusually clean rectangle pattern around the 200-day since the tail-end of January. The bottom of the pattern is also an old resistance level from a bullish rectangle created during October and November.
It looked set to break on several occasions, but now with the risk-trade firmly on its heels as coronavirus fears become further entrenched, a breakdown appears in the works.
At the time of this writing, NZD/JPY is below the bottom of the formation at 69.94, which could set off a significantly larger sell-off today. However, it will be important for the breakdown to confirm with today closing below the bottom of the pattern.
A confirmed break will have the bottom of the Oct/Nov rectangle in play down under 6900. Beyond there the next support level doesn’t arrive until a trend-line passing up from 2009 under the 2019 low, down around the 6750/6800-area.
As long as a close doesn’t develop back inside the pattern up to around 7030 or higher, then the break will remain valid.
NZD/JPY Daily Chart (breaking out of rectangle)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.