NZD/JPY traded north on Tuesday after it hit support near the 73.00 barrier. The recovery brought the rate above the tentative downside resistance line taken from the peak of the 1st of August, as well as above the 73.40 resistance (now turned into support) hurdle. In our view, the break above 73.40 has confirmed a forthcoming higher high on the 4-hour chart and may have signaled a short-term reversal to the upside.
The rate is now trading above a new short-term upside trendline, drawn from the low of the 15th of August. If the bulls are willing to stay in the driver’s seat, then we may see them pushing the rate towards our next resistance obstacle, at around 74.15, defined by the inside swing lows of the 2nd and 3rd of July.
Looking at our short-term oscillators, we see that the RSI rebounded from near the crossroads of its 50 level and its respective upside support line, while the MACD has just poked its nose above both its zero and trigger lines. These indicators detect positive momentum and support the case for the rate to continue recovering for a while more.
On the downside, a move back below 73.00 could bring the pair back below the aforementioned tentative downside line drawn from the peak of the 1st of August. Such a move may encourage the bears to jump back into the game and perhaps set the stage for another test near 72.35, a support marked by the lows of the 13th and 15th of August.
