JPYNZD unable to break through key resistance level
Japanese Yen/New Zealand Dollar (JPYNZD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, JPYNZD ended the month -0.75% lower at 0.014247 after edging lower 4 pips (-0.03%) today on high volume. Trading 98 pips higher after the open, JPY/NZD was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (JPYNZD as at Jul 31, 2020):
Friday's trading range has been 171 pips (1.2%), that's far above the last trading month's daily average range of 112 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for JPYNZD.
Two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Bearish High-Wave Candle which are both known as bearish patterns. The last time a Bearish Spinning Top showed up on July 17th, JPYNZD lost -0.54% on the following trading day.
After trading as low as 0.014184 during the day, the market found support at the 20-day moving average at 0.014207. Unable to break through the key technical resistance level at 0.014290 (R1), the currency closed below it after spiking up to 0.014355 earlier during the day. The failure to close above the resistance might increase that levels significance going forward.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying could accelerate should prices move above the close-by swing high at 0.014378 where further buy stops might get triggered. Selling could speed up should prices move below the nearby swing low at 0.014168 where further sell stops might get activated. As prices are trading close to July's high at 0.014438, upside momentum could accelerate should the FX pair mark new highs for the month.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish High-Wave Candle" stand out. Its common bearish interpretation has been confirmed for JPY/NZD. Out of 30 times, JPYNZD closed lower 56.67% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 66.67% with an average market move of -0.48%.