NZDJPY recently busted through resistance at the 74.00 major psychological mark then zoomed up to a high of 74.63 before retreating. Applying the Fibonacci retracement tool shows where buyers might be waiting.

The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside. In other words, these support levels are more likely to hold than to break. The 38.2% level is close to the broken resistance at 74.00, which might hold as strong support.

A larger correction could last until the 50% level at 73.68 that lines up with the 100 SMA dynamic inflection point. The 61.8% Fib is near the 73.50 minor psychological mark, which might be the line in the sand for a correction.

Stochastic is still heading down to show that selling pressure is present, and the oscillator has room to go before reflecting oversold conditions or exhaustion among sellers. Once it does and starts turning higher, bullish momentum could return and allow support areas to hold.

RSI is also heading down and has more room to move south, so price could follow suit while sellers have the upper hand.

There are no major reports due from both New Zealand and Japan this week, so this pair could move mostly based on market sentiment. Risk appetite has been in play for the last week of the previous year as the focus has been on the Brexit agreement and US stimulus.

A continuation of this market optimism throughout the start of this year might mean more gains for NZDJPY as the Kiwi tends to benefit from stronger demand for riskier assets. On the flip side, the lower-yielding yen tends to get dumped as traders no longer need a flight to safety. A pickup in risk aversion, meanwhile, could bring in losses for the pair.