NZD/JPY Price Analysis: Finds offers at 200-EMA despite 50 bps rate hike by RBNZ
- A descending triangle formation is indicating a squeeze in volatility.
- The 200-EMA has acted as a major hurdle for the kiwi bulls.
- The RBNZ has elevated its OCR by 50 bps to 2.50%.
The NZD/JPY pair has surrendered its sharp upside move from 84.20 after the announcement of the interest rate decision by the Reserve Bank of New Zealand (RBNZ). The central bank has announced a rate hike by 50 basis points (bps). Officially, the Official Cash Rate (OCR) has escalated to 2.50%. On a broader note, the cross is declining gradually after surrendering the crucial support of 85.00.
A descending triangle formation on an hourly chart is indicating a squeeze in volatility. The downward sloping trendline of the above-mentioned chart pattern is plotted from June 28 high at 85.29 while the horizontal support is placed from June 16 low at 83.00. The cross is expected to remain sideways further.
The yen bulls have defended the 200-period Exponential Moving Average (EMA) at 84.10. Also, the kiwi bulls have slipped below the 20-period EMA at 83.88.
Meanwhile, the Relative Strength Index (RSI) (14) has faced barricades around 60.00, which signals that the kiwi bulls need more momentum to deliver a fresh leg of the rally.
A downside break of the descending triangle at 83.00 will drag the asset towards May 26 low at 81.88, followed by May 24 low at 81.88.
On the flip side, the kiwi bulls could attain the dominant position if the asset oversteps July 11 high at 84.70, which will send the asset towards the round-level resistance of 85.00. A breach of the latter will drive the cross towards June 28 high at 85.29.
NZD/JPY hourly chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
