AUD/JPY – Progression of a Bullish Market

AUD/JPY - Progression of a Bullish Market

The AUD/JPY looks bullish in the 4H, daily, weekly, and monthly charts. Let’s examine the progression of the current bull market and where we should expect the pair to go in the short and medium-term.

AUD/JPY 4H Chart 5/27
audjpy 4h chart 05272015
(click to enlarge)

Pennant Breakout:
In the 4H chart, we can see that AUD/JPY has been bullish at least since April. For the most part price held above the 50-, 100-, and 200-period SMAs and the 4H RSI stayed above 40. After finding resistance at 97.30, the pair retreated. The slide was choppy, and indicative of a correction and not a motive wave. It eventually turned into a pennant pattern. This week, price broke above this pennant pattern, signaling a continuation of the prevailing uptrend. A break above 96.00 would clear above some key resistance factors and strengthen the bullish breakout signal. This would open up the 97.30 high with risk of further upside.

AUD/JPY Daily Chart 5/27
audjpy daily chart 5/27
(click to enlarge)

The daily chart shows a shift from a bearish trend into a bullish one after making a low on the year at 89.36.

AUD/JPY Weekly Chart 5/27
audjpy weekly chart 5/27
(click to enlarge)

The weekly chart shows a neutral-bullish market. The mode was bullish heading into 2013 after which it turned sideways. However, we saw the key lows in the years being higher and higher. Also price bounced off the 200-week SMA this year, maintaining the bullish bias.

AUD/JPY Monthly Chart 5/27
audjpy monthly chart 5/27
(click to enlarge)

The monthly chart shows that the market was bullish until the financial crisis which boosted the JPY since it was a safe-haven currency. It was also due to the unwinding of carry trade. But since 2009, AUD/JPY has been rallying. Price action has progressed above the cluster of 200-, 100-, and 50-month SMAs. Price also bounced off this cluster as support this year, adding to the bullish outlook of the AUD/JPY.

As we can see in the multiple time-frames, AUD/JPY has been in a bullish trend since 2009 and still maintains that mode.

In the short-term and the short-medium-term, there is upside risk first towards the 97.30 high and the psychological level of 100. In the medium and medium-long-term, the highs around 102.50 and then 105 will be in sight.

This bullish outlook can change if the Bank of Japan announces that it will slow down its stimulus measures.

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