Most of the pairs with the JPY, on Friday, created a shooting star on the daily chart. After such a strong movement, that can be an invitation to go south. For the past few weeks, JPY was on the back foot and was loosing heavily against major peers. Depreciation of the Yen was supported from both sides: fundamental and technical.
The short-term bearish correction that we mentioned in the first paragraph, is very probable, especially on the NZDJPY, which apart from the shooting star on the D1, has also two other bearish factors. First one is that the price made a false breakout above the 79.2 resistance (upper blue). False breakouts are usually very strong indicators to go against the initial movement. The second one is that we broke the mid-term up trendline (gold). All that can be considered bearish and we should not be surprised that the new week starts here on the back foot.
Although the sentiment is negative, it seems that it will not be negative for long. The first potential target for the drop is the 78.5 (lower blue area). The long-term sentiment remains positive and that what we see now, is just the take profit action, at least for now.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis
This article was originally posted on FX Empire
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