NZDJPY has been trending lower since July 2017. The lower highs and lower lows since the 2017 high at 83.90 tell the story.
But since late October, buyers have had their way.
The NZDJPY managed to claw back more than 500 pips since the quadruple bottom at 72.35.
There are actually two channels at work here.
One recently gave rise to the 500-pip rally I just above.
The pattern above extends from the year-to-date high at 81.56. Buyers cleared the level on November 1st and never looked back.
However, the rally has stalled in recent weeks. NZDJPY bulls have had to retreat since carving the November 15th high at 77.72.
And that brings us to the second channel.
The one below extends from the July 2017 high. Remember, that’s where the downtrend began 16 months ago.
Buyers encountered selling pressure on November 15th because of channel resistance.
That said, they’ve held their ground relatively well. The recent resilience from bulls could be indicative of a second breakout.
At the same time, as long as channel resistance near 77.30 is intact on a daily closing basis, NZDJPY is vulnerable.
Keep in mind that I use New York close charts, so a “daily closing basis” refers to the 5 pm EST close.
I’ll be the first to admit that horizontal levels are hard to come by, at least ones that stand out.
The only exception to that might be 79.30. You can see how this area has served as a pivot since February 2016.
Beyond that, we have 81.30 followed by the multi-year high up near 83.70.
For now, though, NZDJPY buyers have their work cut out for them. Until they can clear resistance near 77.30, there isn’t much to do here in my opinion.
My only reason to lean toward a bullish outlook is the fact that NZDJPY is coming off the bottom of a 1,150-pip range that has been in place since 2015.
A close above channel resistance could trigger the next leg of this rebound. Alternatively, a rejection from 77.30 resistance would take price back to 75.50.
Note: The chart below shows the weekly time frame.