Yen versus Antipodeans

NZDJPY, H4 and Daily

USDJPY rallied to a new 9-month high at 114.55, despite the Yen managing to gain against other currencies amid a backdrop of wobbling stock markets. A favourable shift in yield differentials has lifted the pair higher. The majority of gains have been seen against antipodean currencies, with both AUDJPY and NZDJPY drifting lower for the 3rd consecutive day.

The NZDJPY is currently retesting 20- and 50-day SMA, at the low 74.00 level, while as we wrote last month, “ The pair has been following a bearish linear Regression Channel since July 2017, something that is likely to continue in the long term, since no break to the upside of the channel has occurred so far.” – The pair closed yesterday below the median line of the channel, giving signs that the price action may face another leg to the downside, since it so far seems unable to change this long-term decline, suggesting further significant losses.

This, along with a possible closing below the 20-day SMA today and hence the confirmation of 3 black crows, could suggest that the outlook in the medium term will turn from positive to negative. Technically-wise the same bearish picture is seen in momentum indicators, as daily RSI just crossed below neutral zone. MACD remains within positive area, providing a mixed picture for the pair, however, it moved below its signal line today, something that implies intraday weakness.

Hence, if bears manage to push NZDJPY at the lower Bollinger bands area at the closing today, then the expectation is for a retest of the 73.50 Support level, which is the 61.8 Fibonacci retracement level since the September rebound. Immediate Support holds at 73.95. Such a break could confirm the continuation of the downtrend and hence the possibility of further significant losses.

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Andria Pichidi

Market Analyst

HotForex

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