NZD/JPY formed the top near the 74.00 psychological resistance while moving just a few pips above that level. Since December 11th, the MACD oscillator started to form a bullish divergence. It can be seen that in the medium and short term, there is a double bearish divergence, which implies the potential trend reversal or a corrective move down.
After price broke the uptrend trendline, it has nearly tested the 73.00 psychological support and corrected up. Right now, NZD/JPY has approached and so far rejected the 88.6% Fibonacci retracement level at 73.92. If the correction down will take place, this resistance area is likely to be respected, stopping the price from producing a new higher high.
Therefore, as long as NZD/JPY remains below 74.02, there is a good probability that the downside move is emerging. It might take the price down to the 72.46 level, resulting in a 130 pips decline. This support level is based on the 61.8% Fibs and corresponds with the average-price uptrend trendline as well as the 200 Simple and Exponential Moving Average.
If/when the price will start the decline and manages to break below the 72.46 support, it might confirm a downtrend rather than just a correction down. In this case, the NZD/JPY price can drop down to either 71.50 or 70.50 support level, based on the previous supply/demand areas.
On the upside, a break above the recently printed high at 74.02 is likely to invalidate the bearish outlook and the NZD/JPY uptrend can be expected to continue. Nonetheless, the risk/reward ratio currently presented still remains very attractive.
Key support levels: 73.05, 72.46
Key resistance levels: 73.92, 74.02
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Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
After price broke the uptrend trendline, it has nearly tested the 73.00 psychological support and corrected up. Right now, NZD/JPY has approached and so far rejected the 88.6% Fibonacci retracement level at 73.92. If the correction down will take place, this resistance area is likely to be respected, stopping the price from producing a new higher high.
Therefore, as long as NZD/JPY remains below 74.02, there is a good probability that the downside move is emerging. It might take the price down to the 72.46 level, resulting in a 130 pips decline. This support level is based on the 61.8% Fibs and corresponds with the average-price uptrend trendline as well as the 200 Simple and Exponential Moving Average.
If/when the price will start the decline and manages to break below the 72.46 support, it might confirm a downtrend rather than just a correction down. In this case, the NZD/JPY price can drop down to either 71.50 or 70.50 support level, based on the previous supply/demand areas.
On the upside, a break above the recently printed high at 74.02 is likely to invalidate the bearish outlook and the NZD/JPY uptrend can be expected to continue. Nonetheless, the risk/reward ratio currently presented still remains very attractive.
Key support levels: 73.05, 72.46
Key resistance levels: 73.92, 74.02
Thanks for your support! If you liked this analysis, please support our profile with a 👍 and follow us to get a new daily analysis.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.