Market NewsTechnical Analysis

NZD/JPY: Bull Waits for a Reversal; Bear Waits for a Breakout

  • The pair has been heading towards the downside with good momentum
  • It trades around SMA 30
  • The price made a bearish breakout at a trend line in the H1 Chart
NZD/JPY H4 Chart
NZD/JPY H4 Chart

NZD/JPY Simple Moving Average 30 Holds the Price

The pair has found its resistance around 87.750. It has been bearish since then by producing two consecutive bearish candles followed by a doji and another bearish candle. As of writing, the pair trades right at Simple Moving Average 30. The sellers must be eagerly waiting for the chart to make a bearish breakout. A breakout followed by breakout confirmation may attract the sellers to go short in the pair and drive the price towards the South. On the other hand, if Simple Moving Average continues to hold the price and produces a bullish reversal pattern, the buyers may go long in the pair and push it towards the North. The price may find its next resistance around 88.550.

NZD/JPY H1 Chart
NZD/JPY H1 Chart

The Price Makes a Breakout at a Bullish Trend Line

The H1 Chart shows that the price made a bearish breakout at the trend line and traded below it for several candles. As of writing, the price stays below the trend line. Thus, the H1 traders may look to go short in the pair and drive the price towards the South. The price may find its next support around 86.300. On the contrary, if the price goes back above the trend line, the buyers may take over and push the price towards the upside with strong bullish momentum. Since the H4 chart is not conclusive, we may see some vicissitudes in the pair today.

Concisely, the H1 traders should be very careful with their trade management in NZD/JPY.

By considering both charts, it seems that traders should be very patient with the pair to find out its next direction. A bullish reversal pattern at SMA 30 may set a bullish tone. However, a breakout below SMA 30 may need to be confirmed and produce a bearish reversal candle. That is going to take time. Since it is the last trading day of the week, we may end up having a neutral day in case of a bearish breakout.

Written by: Md Tareq Sikder, Senior Analyst Forex Prop News

Contact and follow Tareq on Twitter: @tareqfpn

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