NZD/JPY Price Analysis: Kiwi rebounds from 20-day SMA, yet consolidation looms
- The Kiwi retakes control against the Yen on Wednesday, bouncing off the 20-day SMA and surging towards 96.75.
- Despite the buyers' push, the pair is likely bound to a consolidation period.
- The established fortification around the 20-day SMA serves as a guard against further declines.
On Wednesday, the NZD/JPY pair saw a formidable rebound from the 20-day Simple Moving Average (SMA) at 95.50, launching upward towards 96.75. But despite the buyers' effort, it appears that the pair is firmly locked within a consolidation phase, limiting the chances of a quick overrunning of the multi-year high at around 97.00.
The Relative Strength Index (RSI) on the daily chart, currently at 64, has navigated upward from Tuesday's modest reading of 54, indicating a positive momentum shift. Now residing comfortably in the positive territory, this demonstrates an uptick in buying pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) continues to print flat red bars, suggesting moderating selling momentum and reinforcing the likelihood of a continuation of the consolidation period rather than a full reversal.
NZD/JPY daily chart
While buyers displayed renewed energy, the consolidation phase established after the impressive sprint from near 91.00 to 96.00 in May seems to hold sway. This likely indicates that the bullish contingent may need a breather before mounting further upward movements.
For buyers to reaffirm their hold, they would need to overcome the 97.00 resistance, opening the gates for another ascension towards new highs. However, until such a rally materializes, the pair may continue to tread water as it digests the recent spike in buying pressure.
Author
Patricio Martín
FXStreet
Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.
