NZDJPY Tests Bearish Trend Line Again

The NZDJPY cross rose sharply on Friday and was 0.65 per cent stronger during the London session, as it was trading slightly below the 74 handle and testing the long-term bearish trend line yet again.

Thursday's risk-off session ended quickly, and sentiment became positive once more, which might be considered evident from rising JPY pairs and stocks. It seems as if the NZDJPY cross is now facing a large resistance - July lows combined with the strong bearish trend line, which are located at around 74.00/74.10. The price jumped beyond this trend line in September, but it was only a false breakout and the cross returned back below this downtrend line quickly. Therefore, bulls may have another chance to prove that the latest sell-off is ending and the price can move higher.

If the 74.10 area is taken out, further rise toward the 100-day moving average could occur. This resistance is located at 74.75 and the next target for bulls might be at the previous swing highs at 75.50.

On the downside, the support could be seen at Thursday's lows near 73.35 and if broken, further reduction towards the 73 level might occur.

As long as the cross remains below the downtrend line, the outlook seems bearish, however, there is a triple bottom pattern forming on the daily chart, which is a bullish reversal formation. It will be interesting to see how the situation regarding the NZDJPY cross will evolve.

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