NZD/JPY Price Analysis: Sellers test strength as consolidation persists

During Monday's session, the NZD/JPY pair experienced a slight retreat as the sellers tried pushing past a strong resistance at the 96.30 area. However, the charm offensive from the buyers wasn't entirely diminished, holding the pair in a protracted consolidation phase over the course of the day.

Though still well within positive territory, the Relative Strength Index (RSI) has dropped to 67, from 71. This drop, mild in nature, indicates a reduction in the momentum that characterized the previous session's overbought situation However, on Monday the index managed to jump back near the 70 threshold suggesting that there is still more toom to correct. Concurrently, the Moving Average Convergence Divergence (MACD) continues to register decreasing green bars, suggesting a decline in buying momentum. The combination of these factors implies the potential for a continued period of consolidation, rather than a reversal of the uptrend seen recently.

NZD/JPY daily chart

This retreat is by no means a synonym for reversal. The outlook still remains positive, and the NZD/JPY pair continues to rest well above a healthy support level at 95.50. For the balance to tip in favor of the sellers, they would need to crack this support and break below the 20-day Simple Moving Average (SMA) at 95.20, a level that has provided reliable support for buyers since the beginning of May. Until then, the current pattern is likely to be viewed as corrective and part of the ongoing consolidation phase.