NZD/JPY continues to drift lower as investors are slowly buying the yen. Looking at the bigger picture, the pair continues to trade above its long-term upwards moving trendline, drawn from the lowest point in March 2011, which keeps the long-term outlook of NZD/JPY somewhat positive. But from a near-term perspective, the pair continues to run below the short-term downside resistance line, which is currently marking the short-term direction. Another important thing to mention from the short-term perspective, which is in favour of the bears, is that the pair has broken the short-term tentative upside support line, drawn from the low of the 29th of May.
For now, we stay with the bears and aim for lower levels. Because the key area of support at 75.35 was broken already, this indicates that there is some potential for NZD/JPY to move lower towards the 75.00 level. If this level is not able to withhold the rate from dropping lower, then the pair could make its way to the 74.55 zone, marked by lowest point of May. Slightly below that lies the aforementioned long-term upwards moving trendline, where the rate could stall for a while, before the bulls and the bears decide who dictates the rules from there onwards.
Alternatively, a move back above the previously mentioned tentative upside support line could give the bulls some hope, and they could eventually drive NZD/JPY towards the recent higher levels. The first area of resistance could be seen at around 75.90, a break of which could lead to a test of the 76.20 level. If the pair doesn’t stop there, then we could start aiming for the 76.45 area, which is near the 200 EMA.
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