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NZD/JPY Testing Support- Outlook Remains Bearish Sub-81.40

NZD/JPY Testing Support- Outlook Remains Bearish Sub-81.40

2016-01-05 20:47:00
Michael Boutros, Strategist
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Talking Points

NZDJPY Daily

NZD/JPY Testing Support- Outlook Remains Bearish Sub-81.40

Chart Created Using FXCM Marketscope 2.0

Technical Outlook: NZDJPY broke below channel support yesterday with the decline now coming into initial support at the confluence of the 100% extension of the decline off the December high & the November low at 79.40/42. The immediate short-bias is at risk while above this level, but we’ll be looking to sell rallies / short-triggers on a rebound.

A break lower targets support objectives at 78.90 & the 61.8% retracement at 77.84 which converges on the median-line next week. Initial resistance stands at 80.82 with our bearish invalidation level set at the trendline confluence around 81.35/40. Note that RSI has broken a support-trigger dating back to late September and we’ll want to see the oscillator dip sub-40 to validate a broader turn in the pair.

NZDJPY30min

NZD/JPY Testing Support- Outlook Remains Bearish Sub-81.40

Notes: Intraday RSI divergence into the lows with a pending resistance-trigger suggests the short-side is vulnerable immediately above 79.40 with initial resistance seen at 80.10 backed by 80.82. We will be looking for a rebound to offer favorable short entires with a breach above the upper median-line parallel / 81.16/38 needed to invalidate our near-term outlook. Such a scenario targets the 61.8% retracement at 81.85- 82.03 (monthly open) and the weekly opening range high at 82.23.

A break lower targets a key near-term support confluence at 78.88 where we could get a more significant rebound. Subsequent targets are eyed at 78.50, 77.84 & 77.12. A quarter of the daily average true range (ATR) yields profit targets of 25-29pips per scalp. The economic docket for both New Zealand & Japan are light over the next few days so we’ll be looking for the US Non-Farm Payrolls report to steer market sentiment heading into the close of the week.

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Relevant Data Releases

NZD/JPY Testing Support- Outlook Remains Bearish Sub-81.40

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

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