- NZD/JPY is awaiting the RBNZ and will depend on the outcome.
- Volatility would be expected by the structure is clear, both on the upside and downside.
In the run-up to today's key Reserve bank of New Zealand event, the bird is on focus and a compelling chart pattern has emerged on the daily chart for NZD/JPY.
The M-formation is a bullish prospect for the day ahead, but it will depend on the RBNZ hiking rates and meeting the expectations of the market. Anything short could be catastrophic for out of the money NZD longs.
NZD long positioning has received some help of let from good jobs data which had been cementing expectations about an August 25 bp hike by the RBNZ and there is plenty of room for the kiwi to go higher on a hawkish RBNZ.
However, the bord could meet the same fate, if not worse if the RBNZ holds and leaves prospects of a lower NZD/JPY for the days and weeks ahead.
The following illustrates both scenarios from a technical point go view.
From a daily perspective, the price is establishing and could be headed for a test of the confluence between the prior lows and the 61.8% Fibonacci retracement target near 76.89.
With that being said, the 15-min chart is showing that the price is struggling on first attempts to break resistance near 76.00.
The RBNZ could hold today and that would be expected to see the kiwi a lot lower and that would expose daily downside structural targets of 74.50 (200 SSMA 74.40) and 73.90/00:
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