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- NZD/JPY testing down-trend support after reversing off key resistance last month
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NZD/JPY Daily Chart
Technical Outlook: NZD/JPY broke below pitchforksupport this week after reversing off key long-term resistance at 83.56/74. Note that this move also clears the July monthly range and keeps the focus weighted to the downside while below 81.67.
The decline is now testing the lower parallel of a near-term descending slope extending off the highs. Watch today’s close- a close below targets the 200-day moving average backed closely by the 50% retracement at 79.77.
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NZD/JPY 240min Chart
Notes: A closer look at price action highlights near-term support into 80.25 (6/21 swing lows) with interim resistance now eyed at 81.12. Broader bearish invalidation stands at the confluence of the July low, median-line and the 38.2% retracement at 81.63/67.
A break lower from here would likely see accelerated losses for the pair with such a scenario eying subsequent support targets at 79.77 & 79.37 & the 61.8% retracement at 78.79. From a trading standpoint, the immediate risk is for a near-term rebound off these levels but ultimately I’d be looking to fade a rally. Added caution is warranted heading into the Reserve Bank of New Zealand (RBNZ) interest rate decision later tonight with the release likely to fuel increased volatility in the Kiwi crosses.
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Relevant Data Releases
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- Written by Michael Boutros, Currency Strategist with DailyFX
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