Bulls maintain dominance, overbought conditions may fuel a correction

• The NZD/JPY rose by 0.52% during Thursday’s session to 93.34.
• The daily RSI of the NZD/JPY signals overbought conditions, indicating a strong buying momentum with possibilities of a near correction.
• On the hourly chart, indicators are consolidating, making it a deviation from the overbought vibe of the daily chart.

In Thursday’s session, the NZD/JPY rose to 93.34, rallying by 0.52% reaching its highest level since 2015. It appears that buyers have predominantly influenced recent trends, causing the pair to enter an overbought territory with a Relative Strength Index (RSI) above 70 on the daily chart. While the persistent uptrend remains unbroken, caution might be advisable due to the over-extended buying movements which could use a healthy correction.

Meanwhile, the daily Moving Average Convergence Divergence (MACD) histogram continues to print green bars, indicating positive momentum in the short term. This underscores the powerful buying activity that has driven the pair into overbought territory.

In contrast, the hourly chart displays the RSI within a healthy 50-70 range, foreshadowing a potential short-term cooling off or consolidation period. Likewise, a slowdown in the robust buying momentum is suggested by the flat red hourly MACD histogram bars. However, the broader uptrend remains intact above the 200, 100, and 20-day SMAs on the daily chart.

NZD/JPY daily chart

NZD/JPY hourly chart