The uptrend on AUDJPY might soon be over since the pair formed a reversal pattern on its 1-hour time frame. Price created a double top with the neckline around the 91.00 major psychological level, suggesting a potential selloff of around 150 pips or the same height as the double top formation.
However, stochastic is moving up, suggesting that buying pressure is picking up. Similarly, RSI is moving higher, also indicating a potential bounce. In that case, a move up to the tops around the 92.50 minor psychological resistance might take place.
In addition, the 100 SMA is above the longer-term 200 SMA, suggesting that the path of least resistance is to the upside. A downside crossover might still indicate that a reversal is about to take place. A selloff below 91.00 could lead to a test of support at 89.50, which is around the previous lows.
AUDJPY Fundamental Factors
Earlier today, gold suffered a sharp selloff when China released its data on foreign reserves. The country added fewer than expected gold assets to its portfolio, leading to speculations of lower demand for the precious metal.
The correlated Australian dollar followed through with the gold selloff, as there were no other market events lined up on the schedule for the Asian trading session. Risk aversion could continue to keep commodity gains in check and lead to further losses for AUD.
Japanese banks are closed for today’s Marine Day holiday, which means that liquidity is lower among yen pairs. There are no reports on tap from Japan, also confirming that risk flows could direct AUDJPY price action.
Tomorrow, the RBA will release the minutes of its latest monetary policy meeting. Their rate statement didn’t contain any changes in interest rates but Governor Stevens highlighted the steeper than expected drop in commodity prices, which is negative for the country’s trade activity.
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