Technical Analysis – NZDJPY trades beneath 100-SMA; 50.0% Fibo holds inside gap

Anthony Charalambous, XM Investment Research Desk

NZDJPY recorded a bounce up in the short-term, from the five-and-a-half-month low of 70.25 on June 18, and in the last month has pushed north into the Ichimoku cloud. The price stalled ahead of the upper boundary of the cloud coupled with the 100-day simple moving average (SMA) in the previous session.

There is a lack of direction in momentum indicators, as the short-term Tenkan-sen line is pointing upwards, although the Kijun-sen is flattening. Furthermore, the MACD is moving sideways in positive area and the RSI approached the overbought level and turned down. The ADX suggests a strong trend persisting.

Shifts downwards would require the near resistance of 72.92 to hold, while a budge to the price below the 38.2% Fibonacci retracement level of the down leg from 76.77 to 70.25 around of 72.75, could see the 23.6% Fibo of 71.80 be tested alongside the 50-SMA. If the run down keeps up, a breach of the support of 71.50 would open the scenario of the low of 70.25.

Congested overwhelming pressure to the upside exists initially from the upper boundary of the Ichimoku cloud and the 100-SMA, with looming 50.0% Fibo of 73.50 moving inside a gap that was reached on May 6. If these are breached, price could face the 200-SMA, which stands near the 61.8% Fibo of 74.28.

Overall, in the short-term picture, traders should wait for a penetration of the Ichimoku cloud in either direction for clear tendency.