NZDJPY has seen an impressive ascent from the recent 2020 lows witnessed during the height of the pandemic. Since then, prices have been trading in an encouraging ascending channel.
A few tests at the lower border of the channel has seen significant support, leading prices to revert towards the mean. The movement away from the top of the Ichimoku cloud has cemented the rally.
However, the recent divergences on the momentum indicator suggest a possible shift in the trend, which could lead to another test to the downside.
Should the channel be broken, then the next test would be the piercing of the cloud. This would then bring prices below the 75 level and a possible full reversal.
A shorter intraday perspective sees the currency pair in somewhat of a hummingbird pattern. With the recent peaks and troughs on display.
We now look ahead to a slight decent towards the Ichimoku cloud, before a bounce at the said level brings prices to higher highs. This would be apparent with a break at the recent peak of 76070.
However, should prices not be able to break free from the cloud, then a test at the 76 area could see prices move lower in the short-term.