• NZDJPY extends bullish streak above 92.00 level

• Bulls remain firmly in control

• Overbought signals begin to flash red

NZDJPY has been recording fresh highs all week and scaled a nine-year high of 92.98 earlier on Wednesday. The momentum indicators suggest that the bullish bias isn’t likely to fade in the near term. However, both the RSI and the stochastics have entered overbought territory, pointing to increased risk of a downside correction.

If the pair makes a renewed push towards the 93.00 handle, there could be stiff resistance until the 93.14 mark, which is the 223.6% Fibonacci extension of the January downleg. Successfully clearing this area would turn the focus to the 261.8% Fibonacci extension of 93.81.

However, if the rally runs out of steam and the price heads south, there’s likely to be some support around the 161.8% Fibonacci of 92.06. A slip below it could accelerate the decline, dragging the pair towards the 20-day simple moving average (SMA) just below the 91.00 level. Further down, the 50-day SMA might try to stem the losses at 90.25 before the long-term ascending trend line is tested.

In a nutshell, a drop below the 20- and 50-SMAs would shift the short-term picture to negative but as long as the price holds above the uptrend line, the bullish outlook in the long term should stay intact.