NZD/JPY Soars, But Overbought Readings Hint at Potential Pullback

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The NZD/JPY currency pair is currently trading at its highest level since July 2007, reaching 96.62 on Tuesday. While the overall trend remains bullish, there are signs that a short-term correction might be on the horizon.

Bullish Momentum:

  • Upward Trend: The NZD/JPY is clearly in an uptrend, positioned above its key daily Simple Moving Averages (SMAs) – 20, 100, and 200. This indicates strong upward momentum in the short, medium, and long term.

Overbought Signals:

  • RSI: The Relative Strength Index (RSI) on the daily chart is hovering deep in overbought territory, suggesting that the recent gains might be unsustainable and a price correction could be imminent.
  • MACD: While the MACD on the daily chart still shows positive momentum, the hourly chart suggests a weakening trend with the appearance of red bars in the histogram.

Possible Correction:

  • Support Level: If a pullback occurs, the first major support level to watch is around 95.00. As long as the price stays above its SMAs, any downward movement could be considered a correction within the broader uptrend.

The NZD/JPY’s bullish run might be due for a short-term breather. While the overall trend remains positive, overbought technical indicators suggest a potential price correction. The key level to monitor is the 95.00 support zone. A break below this level could signal a more significant reversal.


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