NZDJPY has been printing lower highs and lower lows since October, trading beneath a downtrend line. The bulls have taken the wheel in recent sessions and are trying to break above this trendline. If they succeed, that could help turn the near-term picture neutral, from negative currently.
Neither the moving averages nor the short-term oscillators paint a clear picture at this stage. The moving averages have flattened completely, while both the RSI and the MACD are stuck around their neutral levels.
In case buyers manage to close above the downtrend line and the nearby high of 77.55, the spotlight would turn towards the 78.00 region, which also encompasses the 200-day moving average. If this crucial region is violated too, that would interrupt the series of lower highs on the daily chart and potentially open the door for a test of 79.20.
Now should the trendline reject the bulls and sellers take back the reins, the first obstacle to the downside might be the 76.45 zone. If that gives way, the next barrier could be the area around 75.90, which halted the retreat twice in December.
Summarizing, as long as the pair trades below the downtrend line, the picture seems negative. A potential break above the trendline and 77.55 would be encouraging, but a close above 78.00 is needed to confirm that the outlook has truly turned neutral.
