NZDJPY extended gains for a third straight day to reach a high of 81.90 early on Friday, a two-month high. Prices have reached a critical level now at the 50% Fibonacci retracement level of the downleg from 92.39 to 70.79. Prices are now pivoting this level at 81.57. There was consolidation around this level during July and August, which indicates the importance of this level.
Momentum is still in bullish territory and the tenkan-sen is above the kijun-sen line. These are bullish signals, so there is still scope for more upside momentum. However RSI is close to 70, which is the overbought territory and could suggest consolidation and a correction in prices in the near-term. The market would need to clear the 61.8% Fibonacci and also rise above the cloud top at 85.18 to see a more decisive shift to a bullish bias. Meanwhile, the 38.2% Fibonacci is important support at 79.03.
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