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NZD/JPY Breakdown in Focus Ahead of RBNZ, Bearish Sub-81.67

NZD/JPY Breakdown in Focus Ahead of RBNZ, Bearish Sub-81.67

Michael Boutros, Strategist

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NZD/JPY Daily Chart

NZD/JPY Daily Timeframe

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

NZD/JPY 240min Timeframe

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

NZD/JPY Economic Docket

Other Setups in Play:

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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