I’m seeing this classic break-and-retest setup already playing out on the hourly chart of NZD/JPY.
Is it too late to hop in or is there still plenty of room for the pair to climb?
As you can see from the chart below, the price is just starting to find some buyers at the area of interest and Fibonacci retracement level.
NZD/JPY: 1-hour
NZD/JPY 1-hour Forex Chart by TV
In particular, NZD/JPY is showing currency strength and bouncing off support at the 50% Fib, which is right around a former resistance zone.
A larger pullback could still take it down to the 61.8% retracement level closer to the 83.00 major psychological mark, but this might be the line in the sand for a bullish correction.
In other words, a break below this could signal that bears have taken over, so it might make sense to hop out of a long trade if the pair falls below 83.00.Technical indicators are pointing to strong odds of an uptrend continuation, though, as Stochastic is heading north while the 100 SMA is above the 200 SMA.
In addition, the gap between the moving averages is widening to reflect strengthening upside pressure. In that case, NZD/JPY could make its way up to the swing high just past the 85.00 mark.
Risk appetite has been pretty shaky these days, which explains why the lower-yielding yen has been raking in gains versus the higher-yielding commodity currency.
However, a shift back towards fundamentals and central bank biases might encourage more Kiwi bulls to charge.
Besides, traders might also be keen on booking profits from their risk-off plays stemming from concerns about the debt ceiling, a possible U.S. recession, and a regional bank crisis. After all, it’s almost the end of the week, so market players might want to steer clear of potential weekend gaps!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.
