Did you miss the NZD/JPY breaking its long-term trend line? Don’t worry; there’s still an opportunity to jump in on a potential retest, especially if you anticipate the reversal gaining momentum.
Take a look at this intriguing spot on the 4-hour chart:
The recent downtrend for NZD/JPY has been fueled by a mix of risk-off behavior due to global trade concerns and a hawkish tone from the Bank of Japan. This has kept the currency pair in a steady decline over the past month.
Earlier, we witnessed lower highs forming a descending trend line until a significant breakout occurred, sparked by New Zealand’s central bank adopting a less dovish approach.
So, the big question now is, can NZD/JPY maintain this newfound reversal?
Always remember, fundamentals are key drivers of directional biases and market volatility. If you’re not already keeping an eye on the economic landscape affecting the New Zealand dollar and the Japanese yen, now’s the time to get acquainted with those economic calendar events and the latest fundamental news!
Prices hit a snag in their upward journey near the 87.00 psychological level and R2 at 86.99. It appears we’re witnessing a correction towards nearby support areas. With the Fibonacci retracement tool, we can pinpoint additional points where Kiwi bulls might be ready to re-enter the market.
The 38.2% Fibonacci level aligns with R1 at 86.22, while the 50% to 61.8% levels cover a previous resistance zone, now a potential support area, around 85.35 to 85.70. Although the 100 SMA lags below the 200 SMA, indicating persistent bearish pressure, the pair has already broken above these moving averages, suggesting they might now act as dynamic support.
If these Fib levels manage to curb the losses, brace yourself for a possible climb back to the previous highs or even new targets beyond R3 at 88.45. However, stay alert for any break below this critical area, which could lead to a revisit of March lows around S1 at 83.99.
No matter which direction you trade, always keep risk management in mind and be aware of major catalysts that could influence market sentiment!
