The NZDJPY is sharply lower on the day today, but there are some technical signs that a low may be in place.
Overall, the pair has been in a volatile up and down range since breaking above the 89.69 and 89.91 highs from July 2014 and March 2014 back in November 2014 (see daily chart below).
NZDJPY daily chart.
The move above that level took the price initially to a high of 93.96 in December. The fall took the price to 89.958 on December 16. This was just above the 89.91 high from March 2014.
The rally off that went to 94.022 also in December (the 29th). Now in January we are seeing continued up and down volatility once again with more selling than buying.
The pair whips around.
Today, the price low broke below the December 16 low at 89.958 and the March 2014 low at 89.91. The low reached 89.82. That break should have solicited more selling. However, the price has since rebounded – albeit in an up and down range near the bottom. Nevertheless, apart from the hourly bar that pierced the previous lows, the other bars have remained above the 89.91 level (see hourly chart below). Of note is the low after the US retail sales was not the low for the day. This suggests that there seems to be some dip buyers (I guess that is not so surprising looking at the daily chart).
NZDJPY hourly chart.
Is the bottom in place?
If history is to repeat itself the low reached today was a nice place to stop and bounce. So traders who are long/want to go long will have that level to lean against as a risk defining level. Is there another level to lean against that is higher?
Looking at the 5 minute chart, the pairs consolidation has allowed the 100 and 200 bar MA to catch up to the price. The current price has recently moved back above both those moving averages, and also above the trendline connecting highs from yesterday and today. Admittedly, the price has waffled above and below the 100 bar MA (blue line in the chart below). However, the last break above held a level and the main trend line as well. Closer risk can be defined against the moving average and broken trendline (currently at 89.23).
Is it the bottom? Time will tell. Much is dependent on stocks as that has been a big influence on the JPY pairs. The NZD has been non- trending in an up and down trading range over the last few months. The good news for those looking to buy a dip in this pair is risk can be defined and limited.
NZDJPY trying to bottom on the 5 minute chart.