On Monday I wrote how the NZDJPY bullish outlook hinged on 77.30. It’s the location of descending channel resistance from the July 2017 high.
I was mostly neutral at the time. However, I was leaning toward a bullish view given the way the pair was coming off a multi-year range low.
Here’s what I wrote:
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.
The price action during the second half of November also displayed resilience from buyers.
But the lack of a confirmed breakout left me on the sideline.
Yesterday’s close has changed things. NZDJPY buyers managed to clear the 77.30/40 resistance area on a daily closing basis.
Remember, I use New York close charts. Go here to get instant access to the same charts I use.
I mentioned to members yesterday to keep an eye on the 77.60 horizontal level as well. The area has served as a pivot of sorts for the last few years.
Today’s session has caught a bid at 77.60 so far, but I don’t think the consolidation is over just yet.
One thing you can do is watch for bullish price action on the daily chart. A pin bar from the 77.30/60 area would signal that buyers intend to defend it as new support.
A word of caution though.
We’ve seen NZDJPY trend lower within this descending channel since July 2017. A level this significant may require a weekly close.
In other words, yesterday’s breakout is a bullish sign, but a weekly close above former channel resistance at 77.30/40 would reinforce a bullish outlook.
Fortunately, the weekly close is a little more than 24 hours away.
As long as NZDJPY holds above the new support area highlighted in the chart below, I will remain cautiously bullish.
That said, I would like to see a weekly close above this channel before considering an entry.
Key resistance comes in at 79.30, 81.30 and 83.70. The latter is the high of the descending channel as well as the ceiling of a 1,150-pip multi-year range.