NZDJPY finds buyers at key support level
New Zealand Dollar/Japanese Yen (NZDJPY) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, NZDJPY finished the month 0.76% higher at 70.19 after edging higher 2 pips (0.03%) today on high volume. Trading up to 48 pips lower after the open, the FX pair managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (NZDJPY as at Jul 31, 2020):
Friday's trading range has been 84 pips (1.2%), that's far above the last trading month's daily average range of 55 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 NZDJPY. Prices continued to consolidate within a tight trading range between 69.55 and 70.58 where it has been caught now for the whole last trading week.
Two candlestick patterns are matching today's price action, the Bullish High-Wave Candle and the Bullish Spinning Top which are both known as bullish patterns. The last time a Bullish Spinning Top showed up on July 17th, NZDJPY gained 0.54% on the following trading day.
After trading down to 69.66 earlier during the day, the forex pair bounced off the key technical support level at 69.98 (S1). The failure to close below the support could increase that levels importance as support going forward. After spiking up to 70.50 during the day, NZD/JPY found resistance at the 20-day moving average at 70.39.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying might accelerate should prices move above the nearby swing high at 70.58 where further buy stops could get triggered. Selling might speed up should prices move below the close-by swing low at 69.55 where further sell stops could get activated. As prices are trading close to July's low at 69.26, downside momentum might accelerate should the market mark new lows for the month.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish High-Wave Candle" stand out. Its common bullish interpretation has been confirmed for NZD/JPY. Out of 32 times, NZDJPY closed higher 53.13% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 71.88% with an average market move of 0.73%.
With five out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are NZDUSD losing -1.04% and AUDUSD closing -0.72% lower. On the flipside the best performers have been USDJPY closing 1.12% higher and USDCHF gaining 0.48%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDZAR surging 1.87% and GBPZAR closing 1.79% higher. The worst performers of the day have been NZDCAD tanking -1.15% and NZDHKD closing -1.05% lower. Read more