B: Mike Kulej
During the last few days, the Japanese Yen made strong gains against most other currencies, including the high flying “commodity dollars”. Some link this performance the revaluation of the Chinese Yuan, other point at renewed risk aversion. Whatever the reason, we could see more JPY appreciation.
The NZD-JPY is in a corrective phase of a downtrend on a daily chart. This pair dropped from 69.35 to 58.65 in May. Since then it has been recovering, reaching 65.30 early in the week. An intermediate term chart of this cross indicates a possible reversal pattern forming, which could lead to resumption of the downtrend.
The price just tested the last low at 62.75 and bounced, creating even more important support level. It also dipped under the 100 SMA, which has negative implications. Should the support be violated, the next one of any importance is under 60.00. An uptick in the Standard Deviation indicator is also possible. It has been showing low value, which often precedes acceleration in price movement.
If the indicator starts to increase and this coincides with the break of the current price support, it would be a confirmation of the downtrend, at least on the intermediate term bases.
