I’m seeing a textbook break-and-retest of the double bottom neckline on NZD/JPY.
Will more buyers join in and sustain the climb?
NZD/JPY: 4-hour
This pair recently busted through the neckline of a double bottom pattern, which means that a reversal from the downtrend is in the cards!
A pullback from the breakout is taking place, so more buyers might decide to hop in the rally soon. But at which levels?
The Fib retracement tool has some suggestions on where Kiwi bulls might be hanging out, and the confluence around the 50% level looks like a prime entry spot.
This lines up with a former resistance zone, dynamic support at the moving averages, and is close to the 77.50 minor psychological mark.
Oh, and did I mention that a bullish moving average crossover just took place, too?
At the same time, Stochastic is starting to pull higher after a quick dip to the overbought zone. This means that sellers are exhausted and ready to let buyers take over!
There are no major reports due from both New Zealand and Japan for the rest of the week, so I’m looking at this mainly as a risk sentiment play.
Of course the highly-anticipated U.S. NFP release would likely affect overall market sentiment, so I’ll be on the lookout for risk-on flows that would boost the Kiwi.
