Movement inside bearish channel
NZDJPY has been losing value for more than two months. At that time, price formed a downward channel within which movement continues to this day. In the past week, lower channel limits and key support at 77.70 have been tested. Demand, however, showed its weakness and even failed to test the upper limit of this channel. On the D1 chart you can see that the opportunity was very good.
Possible scenarios
Today’s breakout of support at 77.70 and test of lower limit of the channel may lead to an upward correction. The base scenario is now reflection towards 77.70 and after an unsuccessful attempt to return above that level, return to declines to 76.00.
The alternative scenario assumes that today’s break of support at 77.70 will turn out to be a fake and the price will soon return above that level. If this was the case and ahead of us is still half of the day of continuous quotations, the upper limit of the downward channel 79.00 would be the goal of the upswing.
