NZD/JPY rallies above the 20-day SMA, bears around the corner
- The NZD/JPY stands elevated after a rally towards 89.40, giving it a breather from its recent trailing losses.
- Daily chart indicators like the hint at potential buying momentum despite being in negative territory.
- Regardless of the short-term negative outlook, above 20,100,200-day SMAs indicates a broader bullish control.
In Wednesday's session, the NZD/JPY clocked an uptick of 0.70%, seeing the pair rally to 89.40. An inconsistent journey was seen on the daily chart, hinting at neutral to slightly bullish momentum, with sellers taking a break after four out of the last five days of losses. Despite the upside, in the immediate short term, the four-hour chart indicators have flattened, hinting at a potential shift to the downside as investors may be set to take profits.
Surveying the indicators on the daily chart shows that the buying momentum currently holds the upper hand. Despite the Relative Strength Index (RSI) showing an increasing trend while in negative territory and the Moving Average Convergence Divergence (MACD) displaying steady red bars suggesting a potentially bearish signal, the dominant force is nevertheless the buying side. This is largely attributable to the fact that the pair remains above its 20, 100, and 200-day Simple Moving Averages (SMAs). Such positioning implies a strong bullish dominance over the broader time horizon.
With respect to the shorter time frame, the four-hour chart exposes a somewhat different dynamic. Momentum indicators appear to have reached an equilibrium, slightly favoring the downside. The four-hour RSI, despite sitting in positive territory, is exhibiting a downsloping trend, which typically signals a decrease in buying pressure. Correspondingly, the four-hour MACD, with its flat red bars, reiterates this neutral sentiment.
NZD/JPY daily chart
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Author
Patricio Martín
FXStreet
Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.
