NZD/JPY Price Analysis: Double top in the daily chart, targets a fall to 80.50

The New Zealand Dollar (NZD) dropped on Monday, courtesy of US central bankers reassessing further rate hikes for the next year, alongside dented risk appetite by the Covid-19 crisis in China, triggering riots in the country. Therefore, the risk-perceived NZD/JPY weakened and tumbled by 1.55%. As the Asian session begins, the NZD/JPY is trading at 85.62.

NZD/JPY Price Analysis: Technical outlook

The NZD/JPY daily chart dropped from around 86.70 to 85.60s, exacerbated by the formation of a “double top” chart pattern and the fall below last week’s low of around 86.01. Oscillators led by the Relative Strength Index (RSI) turned bearish, which would open the door for the NZD/JPY to test the 100-day Exponential Moving Average (EMA) at 84.86, followed by the 50-day EMA at 84.52. If the NZD/JPY extends its losses, it will probe the confluence of the November 11 swing low and the 200-day EMA around 83.84/84.00. A breach of the latter would confirm the “double top” and will target a fall.

The NZD/JPY first ceiling level would be the 86.00 mark as an alternate scenario. A breach of the latter will expose the 87.00 mark, followed by the two-month high at 87.45. Once cleared, it will invalidate the double top and pave the way toward the YTD high at 87.86.

NZD/JPY Key Technical Levels