AUD/JPY has been making higher lows but keeps on getting rejected at the 96.00 psychological handle. Consequently, the currency pair has formed an ascending triangle. You will see this if you mark resistance around its most recent highs and connecting the lows it hit in May and June 2014.
This chart pattern is usually considered a bullish signal. Will there be enough bulls in the market to hustle the pair beyond the psychological handle?
It’s worth noting that price is also testing the 200 SMA, further affirming our bullish bias for the pair. The indicator has provided AUD/JPY with support in the past and it may do so once again.
However, it is also interesting to point out that Stochastic indicates that there is still more room for AUD/JPY to move lower as the lines point downwards and have yet to reach the oversold territory.
A bullish candle that closes above the resistance level at 96.00 could mean that we will finally see AUD/JPY make its way towards the highs for April 2013 around 105.50.
On the other hand, a close below the 200 SMA and rising trend line may hint that AUD/JPY is headed to test support at the 100 SMA around 94.00.
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