False Breakout on NZD/JPY: Support Holds and Buyers Take Control
04 February 2025
In today’s analysis, we focus on the New Zealand Dollar to Japanese Yen (NZD/JPY), which had a volatile start to the new week. The pair opened with a sharp drop but managed to reverse by the end of the session, forming a hammer candle. This candle, characterized by a long lower tail and a small body near the top, is a classic signal of buyer strength after a failed attempt to push the price lower. The hammer is marked in yellow on the chart.
The price has since bounced back above the green support level, turning the earlier drop into a false breakout to the downside. This reversal signals that buyers have regained control, providing a buy opportunity as long as the price holds above the green support.
The next target for this move is the blue downtrend line, offering a promising risk-to-reward ratio for traders who capitalize on this potential upside. However, the key to maintaining this bullish scenario is for the price to remain above the support level. A drop back below it would negate the current buy signal.