The AUD/JPY has been in a bearish trend since November’s and 2014’s high at 102.84. Before that the market had some choppy moves with month-long swings, but the direction was unclear. We will see that in the daily chart, but first let’s examine the 4H chart:
(click to enlarge)
As we can see in the 4H chart, price action has formed an inverted head and shoulders. The shoulders came down to around 90.50-90.75 while the neckline was a little above 92.00. At the end of last week, price cleared the 92 handle, officially completing the inverted head and shoulders pattern .Note that this rally also broke above a falling speedline as well as the 50-period SMA. The 4H RSI has broken above 60, showing loss of the prevailing bearish momentum.
To start this week, AUD/JPY retreated but found support above 92.00, respecting the price bottom and thus exposing further upside risk towards the 94.60 area, which is a support/resistance area, up to the 95.00 handle, which was also a common low in mid-January’s price action. Further around 95.00, price will be testing the 200-period SMA, and a falling trendline we will see more clearly in the daily chart.
So, if the AUD/JPY is to remain bearish in the medium-term, the short-term bullish outlook this week should be limited to the 94.60 up to 95.00. A break above 95.00 will likely liberate the AUD/JPY into further uptrend, and the medium-term outlook would have shifted from bearish to neutral if not bullish.
Before the most recent 3-month drop, AUD/JPY was in month-long swings without clear direction since 2013.
We can also see the falling trendline coming down from 102.84, the 2014-high. Let’s look for sellers here especially if the daily RSI approaches 60 and stalls.
Previous post by Author: AUD/NZD Confirms Bearish Breakout with Historic Low in Sight