NZD/JPY: Signs the Big Bearish Trend is Reversing?
Matt Weller, CFA, CMT October 30, 2018 3:30 PM
Yesterday, we highlighted the upcoming BOJ meeting and its possible impact on GBP/JPY (see “Will the BOJ Bring a Trick or a Treat for GBP/JPY?”), but NZD/JPY is also at an interesting technical juncture.
Yesterday, we highlighted the upcoming BOJ meeting and its possible impact on GBP/JPY (see “Will the BOJ Bring a Trick or a Treat for GBP/JPY?”), but NZD/JPY is also at an critical technical juncture.
The pair has been in a prolonged downtrend since peaking in late January, losing nearly 1,000 pips over that timeframe. That said, rates have now found support off the 72.25 area on four separate occasions in the last 10 weeks, suggesting that the longer-term downtrend may be at risk of reversing.
Meanwhile, the RSI indicator is showing a triple bullish divergence with price, signaling that the selling pressure has been receding on each retest of support. With the kiwi trailing only the Aussie and the yen among the weakest major currencies so far in today’s price action, the top of the bearish channel could be under threat as soon as this week.
What bullish readers should watch for is a daily (and ideally weekly) close above the established channel to signal a possible bottom. Above that area, the next hurdle will be the late September / early October highs around 75.50. Of course, signs of a reversal off the top of the channel could foreshadow a fifth test of support near 72.25, so traders will want to keep a close eye on the price action over through the rest of the week.
Source: TradingView, FOREX.com
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.