FxWirePro: NZD/JPY recovery capped shy of 5-DMA, on track to test channel base at 71.75, stay short

NZD/JPY chart on Trading View used for analysis

• NZD/JPY recovery attempts were capped shy of 5-DMA, pair has slipped from session highs at 73.23 and is currently trading at 72.93 levels.
   
• Upside was rejected at 55-EMA resistance in last week's trade and the pair has resumed weakness in downward channel.
   
• Kiwi dented after disappointing GDT auction. New Zealand's bi-weekly GDT auction showed that the GDT price index declined 0.7% following the 3.6% fall witnessed in the previous auction.
   
• Price action is testing new multi-month lows every day, as the Kiwi remains offered across the board in response to poor NZ data and growing conviction among markets that the next RBNZ policy move will be a cut - rather than a hike.
   
• Technicals support further weakness. Stochs and RSI are sharply lower and MACD is on verge of bearish crossover on signal line.
   
• We see scope for test of channel base at 71.75. Violation there could see major downside. Bearish invalidation only above 55-EMA at 74.70.

Support levels - 72.35 (Aug 13 low), 71.75 (channel base), 71

Resistance levels - 73, 73.31 (5-DMA), 73.53 (20-DMA), 74.70 (55-EMA)

Call update: Our previous call (https://www.econotimes.com/FxWirePro-NZD-JPY-resumes-weakness-after-rejection-at-55-EMA-eyes-channel-base-at-7175-stay-short-1423201) has hit TP1.

Recommendation: Book partial profits at lows. Hold for further weakness.

FxWirePro Currency Strength Index: FxWirePro's Hourly NZD Spot Index was at -120.474 (Bearish), while Hourly JPY Spot Index was at 130.633 (Bullish) at 0745 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.