NZD/JPY has been confined by a long-term channel against since November, 2016. Its trading range, however, has diminished substantially during the previous month. As a result, the pair has formed a wedge-like formation (dashed lines) which was drawn from two opposing trend-lines. Its bottom line was tested last week when the Kiwi reversed from the 1.3080 mark. It has since moved higher in a narrow channel up.
Technical indicators suggest that this pattern should be breached today, thus allowing the rate to approach the combined support of the 200– and 100-hour SMAs, the 23.60% Fibo retracement and the weekly PP in the 1.3180/67 territory. Given the strength of this cluster, the Kiwi could reverse near this territory and later test the upper trend-line and the 38.20% Fibo near 1.3280. Subsequently, the rate is expected to form a new wave down just to continue trading in line with the wedge.