NZD/JPY kept sliding yesterday, breaking below the key support (now turned into resistance) of 83.35. That zone had been providing strong support since April 26th. The slide continued today as well, with the pair hitting support slightly below 81.90 zone, marked by the low of March 21st. All this paints a negative short-term picture in our view.
A clear and decisive break below 81.90 could signal the continuation of the prevailing downtrend and may encourage the bears to push all the way down to the 80.27 territory, marked by the inside swing high of March 14th. If they are not willing to stop there, then a break lower could extend the slide towards the low of the day after, at 79.35.
Looking at our short-term oscillators, we see that the RSI hit support near 30 and turned somewhat up, while the MACD remains below both its zero and trigger lines, still pointing down. Both indicators detect negative speed, but the fact that the RSI hit support at 30 makes us careful over a possible corrective bounce before the next negative leg.
In order to start examining whether the bulls have stolen all the bears’ swords, we would like to see a clear break above the peak of May 4th, at around 84.85. Such a move would confirm a forthcoming higher high and may signal a reversal back to the upside. The next stop may be at 85.40, marked by the high of April 28th, the break of which could pave the way towards the 86.60 territory, marked by the inside swing low of April 20th. Another break, above 86.60, could extend the advance towards the peak of that same day, at 87.35.
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