NZD/JPY: Bearish Reversal Confirmed After False Breakout

By Tomasz Wisniewski|

Published: November 08 2024, 09:09 GMT+0

NZD/JPY: Bearish Reversal Confirmed After False Breakout

The New Zealand dollar to Japanese yen (NZD/JPY) is currently experiencing a significant bearish reversal following recent market movements. A key development on the chart is the formation of a false bullish breakout, highlighted within a yellow rectangle. This breakout above the blue resistance line initially suggested a continuation of upward momentum; however, the subsequent reversal, where the price fell back below the blue resistance, has shifted the sentiment to negative. This false breakout is an important technical signal that often indicates a potential for further downside pressure.

With the price now positioned below the blue resistance, traders should note that this constitutes a strong signal to sell. The first immediate target for this bearish move is the red uptrend line. Given the current momentum, it is highly likely that the price will reach this support level. Should the price continue to break below the red uptrend line, the next area of focus would be the green horizontal support, which serves as a secondary target in the case of continued bearish pressure.

False breakouts are powerful indicators in technical analysis, as they often suggest that the market has rejected higher levels and may now shift in the opposite direction. For this scenario to change and for the sentiment to revert to positive, the price would need to climb back above the blue resistance line. Such a move would cancel the negative outlook and signal a potential buying opportunity, indicating that the bearish reversal was temporary.

Source: https://www.axiory.com/analytics/technical-analysis/nzd-jpy-bearish-reversal-confirmed-after-false-bre

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