NZD/JPY Price Analysis: Deeper correction in sight, bullish outlook holds
- NZD/JPY continues consolidating at 97.70.
- The 20-day SMA will offer strong support at 96.30 where the sellers will face a strong fortification.
- Despite the consolidation, the bullish outlook remains afloat, with targets set on the key resistance of 98.00.
On Wednesday, the NZD/JPY cross was seen neutral at 97.70 while extending its phase of consolidation. Nevertheless, the pair upholds robust support at the 20-day Simple Moving Average (SMA) of 96.30, maintaining its position near levels not seen since 2007. In that sense, a healthy correction was increasingly necessary to alleviate the overbought conditions.
The daily Relative Strength Index (RSI) currently sits at 64, slightly lower than Tuesday'sreading, indicating a mild downward momentum. Despite this subtle decline, the indicator remains in positive territory, moving away from extreme conditions. Conversely, the Moving Average Convergence Divergence (MACD) prints a fresh red bar, signaling a reduced buying pressure. This hints at a possible continuation of the consolidation phase.
NZD/JPY daily chart
The predominance of bulls above the 20-day SMA reflects the persistent upward pressure supporting the cross. With technical indicators falling back from overbought regions, the upper hand still belongs to the bulls, albeit with the increasing necessity of a correction or consolidation to sustain the upward trajectory.
Looking ahead, market participants are looking closely at the immediate support level of 97.00, and are eyeing the resistance target of 98.00. A decisive break above this consolidation range would confirm further upside potential, whereas a dip below the 20-day SMA could suggest a deeper correction.