NZD/JPY has been in an advance mode since yesterday, when it hit support at the tentative upside support line taken from the low of November 14th, slightly above the 72.30 zone, marked by the lows of January 9th and 10th. Today, the rate emerged above 73.04, which is Tuesday’s high, thereby confirming a forthcoming higher high on the 4-hour chart. This combined with the fact that the pair is trading above the aforementioned upside line, as well as above all three of our moving averages, keeps the short-term outlook positive in our view.
If the bulls are willing to stay in the driver’s seat, we could soon see them targeting the 73.55 barrier, defined by the peak of December 27th. They may decide to take a break after testing that zone, thereby allowing the rate to correct slightly lower. However, as long as the rate would stay above the upside line, we would still see decent chances for the bulls to pick up their swords and push the battle towards the 73.55 zone again. If they manage to overcome it this time around, this would confirm a forthcoming higher high on the daily chart and may set the stage for the 74.00 zone, defined as a resistance by the high of May 3rd.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from its 50 line and now looks to be heading towards 70, while the MACD, already positive, has turned up and crossed above its trigger line. Both indicators detect upside speed and support the notion for this exchange rate to continue drifting north for a while more.
In order to abandon the bullish case and start examining whether the bears have gained the upper hand, we would like to see a clear dip below 72.30. This would also drive the rate below the pre-mentioned upside line and could initially target the 72.00 level, which is fractionally below an intraday swing low formed on January 8th. If that level is not able to halt the slide either, then we could experience larger extensions, towards the low of the same day, at around 71.25.
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