NZDJPY is testing the bottom of the 71.22-69.90 range, which is likely to collapse as the RSI has restored negative momentum in the bearish area and the 20-day simple moving average (SMA) is heading for a bearish cross with the 200-day SMA.
The 50% Fibonacci is also in the neighborhood making any violation of the barrier important for the sell-off to extend towards the 61.8% Fibonacci of 69.00, while lower, traders could also look for support around 68.50.
In the event the pair fails to breach the bottom of the sideways channel, it could reverse up to challenge the 20-day SMA and the 38.2% Fibonacci of 70.75 of the 66.29-73.51 upleg before the upper boundary of 71.22 comes into view. Moving higher and above the 50-day SMA and 23.6% Fibonacci of 71.80 , buying orders could further increase towards the 72.25 barrier – a tough resistance and support area since 2015.
Meanwhile in the medium-term picture, the positive outlook has faded following the close below the ascending trendline. A potential bearish cross between the 20- and the 200-day SMAs could further deteriorate the sentiment.
In brief, NZDJPY is likely to break its range bound trading and experience additional losses in the short-term. Such an event could further downgrade the outlook in the medium-term timeframe.