Sideways Trend in NZD/JPY: Key Levels to Watch
28 June 2024
In today's technical analysis, we focus on NZD/JPY. Recently, the Japanese yen (JPY) has been under significant pressure, leading to a general decline and upward movement in pairs involving the yen. However, the NZD/JPY pair is exhibiting a unique behavior. Despite the pressure on the yen, the New Zealand dollar (NZD) is also facing some struggles, resulting in the pair being locked inside a sideways trend, forming a rectangle pattern marked in orange on the chart.
This rectangular formation suggests a period of consolidation where the price is awaiting a significant move. The best strategy for trading this setup is to wait for a breakout. A breakout to the upside would signal a buying opportunity, indicating that the NZD is gaining strength against the JPY. On the other hand, a breakout to the downside would suggest a selling opportunity, implying further weakness in the NZD or potential intervention from the Bank of Japan (BOJ) to strengthen the yen.
Given the current levels of the yen and the ongoing speculation about potential BOJ intervention, traders should be vigilant. A downside breakout could lead to a significant decline, targeting the green uptrend line. Conversely, an upside breakout would likely propel the pair significantly higher, offering a robust buy signal. The direction of this breakout will be crucial in determining the next major move for NZD/JPY.