NZD/JPY fell sharply today, after it hit resistance at the downside line taken from the peak of September 14th, breaking below yesterday’s low, which is at around the 77.00 territory. Now, it looks to be headed towards the key support territory of 76.35, which has been supporting the action since August 27th. With all that in mind, we will consider the near-term outlook to be somewhat negative.
That said, in order to get confident on larger declines, we would like to see a clear break below the 76.35 barrier. This will confirm a forthcoming lower low on the daily chart and may initially pave the way towards the inside swing high of August 23rd, at 75.74, which if also broken, may allow the negative stretch to extend towards the 75.15 territory, defined as a resistance by the inside swing high of August 20th.
The RSI lies below 50 and points down, while the MACD, although slightly positive, runs below its trigger line, pointing south as well. The RSI is already detecting downside speed, while the MACD is about to do so very soon. In our view, all this enhances the case for some further declines in this exchange rate, but as we already noted, we will get more confident on that upon a break below 76.35.
We will start examining the bullish case again only if we see a clear break back above 78.15, a hurdle which provided strong resistance on September 24th and 28th. The rate will already be above the pre-mentioned downside line taken from the high of September 14th and may climb towards the 78.65 obstacle, which acted as a ceiling between September 3rd and 14th. If the bulls manage to overcome that barrier this time around, we could see them aiming for the high of June 7th, at around 79.13.
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