After the end of the uptrend, the NZDJPY pair makes multidirectional fluctuations, not daring to start both continuing growth and an active decline. Now the price is at the important level of 83.5, which can determine the direction of NZDJPY movement in the short term.
In terms of macro indicators, the economies of New Zealand and Japan are in a similar position. The more risky nature of the New Zealand currency is partly offset by higher interest rates. On the other hand, the yen could be in much greater demand in the conditions of high economic and political instability in the world, but the low level of bond yields prevents the Japanese currency from rising.
Depending on whether NZDJPY holds out from a full breakdown down the level of 83.5, the following scenarios are possible:
1) If the breakdown of 83.5 is confirmed. In this case, a “double top” is fully formed on the chart with the aim of further falling to the level of 80.
2) If the mark 83.5 stands. In such a scenario, a reversal towards the growth could lead the quotes to the recent highs near the level of 86.5.
Since fundamentally NZDJPY does not have a clear trend now, aspects of technical analysis become more important. The RSI is near the 50 level and is not prioritizing any of the scenarios. Therefore, in order to increase the reliability of entering a deal, it is worth waiting for today's trading to close above or below the level of 83.5, and also take into account the price dynamics at the opening of trading on Monday.
Following options for a trading strategy can be offered:
1) Buy NZDJPY on Monday (if Friday's close and Monday's open are above 83.5). Take profit – 86,5. Stop loss – 83.
2) Sell NZDJPY on Monday (at the close of trading on Friday below the neck line of the “double top” pattern - the level of 83.5). Take profit – 80. Stop loss – 84.
3) If there is no clear downward breakdown or upward rebound from the level of 83.5, it is worth postponing the entry into the transaction until more reliable signals (for example, reversal candlestick patterns) appear.
Traders, at their discretion, can also use Trailing stop instead of a fixed Stop loss.