NZD/JPY struggles for momentum after plunging to a 6½-year low.
NZD/JPY is struggling to recover from its recent plunge to a 6½-year low of 67.56 as the pair once again finds itself testing the psychological 68 level, which could establish itself as a strong support zone.
The momentum indicators are illustrating a weak rebound. The stochastics are heading up, but the %K line already appears to be losing steam and about to cross below the slower moving %D line. The RSI, meanwhile, has flatlined in oversold territory and is not signaling an imminent reversal higher.
If there’s a daily close below the 68 level, the next support would likely come from the 200% Fibonacci extension of the up-leg from 70.25 to 77.23, at 67.28. Slipping below this level could accelerate the declines towards 238.2% and 261.8% Fibonacci extensions at 66.14 and 65.44, respectively, reinforcing the long-term downtrend.
However, if the 68 support holds and prices bounce higher, the first challenge to the upside could arrive at the 138.2% Fibonacci at 69.12, near the January low of 69.15, followed by the 123.6% Fibonacci at 69.55. Clearings these hurdles would significantly ease the downside pressure, but for more convincing signs that the near-term bearish picture is turning positive, prices would need to reclaim the 78.6% Fibonacci at 70.89, close the 20-day moving average.
In the medium-term, however, prices would need to recover above the descending trend line to signal an end to the bearish outlook.
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