NZD/JPY opened with a negative gap today, and after a few hours it tumbled to hit support near 61.10, a level last seen back in July 2012. Then the rate rebounded and is now hovering above a new support zone created today, at around 63.90. Overall, the rate continues to trade below the short-term downside line drawn from the high of February 21st and thus, we would consider the latest rebound as a corrective move before another leg south.
The current recovery may continue for a while more, perhaps until the pair tests the 66.60 barrier, which provided decent support from February 28th until Friday, or until it hits the aforementioned downside line. The bears may decide to recharge from near those levels and perhaps pull the trigger for another test near the 63.90 zone. If they are willing to push back below that level, we could then see extensions towards the 62.00 zone, defined as a support by the low of September 5th, 2012. Another dip, below 62.00 could challenge the 61.10 level again.
Looking at our short-term oscillators, we see that the RSI rebounded somewhat from within its below-30 zone, while the MACD, although below both its zero and trigger lines, shows signs of slowing down. Both indicators suggest that the strong downside speed has started to ease somewhat, which enhances the case for some further recovery before the bears decide to regain control.
In order to start examining whether the bears have decided to take a longer break, we would like to see a clear move above the 68.00 zone, which provided strong resistance in March 2nd and 3rd. In such case, we would expect the bulls to drive the battle towards the 69.15 zone, marked by an intraday swing low formed on February 27th. Another break, above 69.15 could pave the way towards the downside resistance line taken from the high of January 16th, or the psychological round figure of 70.00.