The NZDJPY currency pair on the D1 time frame made higher tops and bottoms with a last higher top being reached when the price bounced off a weekly resistance level on 23 May at 87.304. The Momentum Oscillator reveals negative divergence between point “a” and “b” when comparing the tops at 86.173 and 87.304. This could have alerted active traders that the bears might be staging a comeback and getting ready to challenge the bullish reign.
Confirmation of this was in the form of strong bearish candles with the market breaking through the 15 Simple Moving Average and the Momentum Oscillator dipping into bearish territory.
A possible critical support level formed near the 34 Simple Moving Average when a lower bottom was recorded on 25 May at 84.446. The bulls then gave it their best but failed to gain the upper hand, and a lower top formed on 29 May at 85.338.
If the bears break through the critical support level at 84.446, three possible price targets can be prepared from there. Attaching the Fibonacci tool to the lower bottom 84.446 and dragging it to the resistance level at 85.338, the following targets can be determined. The first target can be estimated at 83.895 (161.8%). If the price manages to break through a weekly support level, the second price target can be expected at 83.003 (261.8%) and the third and final target can be anticipated at 81.559 (423.6%).
If the resistance level at 85.338 is broken, the current scenario is not legitimate any longer. As long as buyers overcome sellers and market sentiment stays negative, the outlook for the NZDJPY on the D1 time frame will remain bearish.
For more information, please visit: FXTM
