The 4H AUD/JPY chart shows a market that formed a price top below 98.67. Then after a pullback price respected this price top and continued to retreat. A we get the 9/15 US session going, AUD/JPY is at a support/resistance pivot around 96.45. The technical conditions in the 4H chart has taken away some bullish biases – price fell below the 100-, and 50-period simple moving averages (SMAs) and the RSI has tagged 30. There is still one last bullish bias in the 4H chart and that is price staying above the 200-period SMA. If price can hold above 96.45, the bullish outlook remains intact for the medium-term.
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Even if the market is not going to be bullish anymore in the medium-term. We might expect some short-term bullish attempt as the RSI shows oversold condition, and the prevailing trend is bullish. A short-term bullish target might be back to the 97.50-97.75 area, between the 100-, and 50-period SMAs.
When we look at the daily chart, we can see more reasons for the bullish outlook. Before the mutli-month consolidation that started in April, AUD/JPY was already bullish. Then in August, price finally broke above this consolidation, and signaled bullish continuation. Now, price is essentially back at this consolidation resistance, which was at 96.50.
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Support: The fact that this is the previous consolidation resistance adds to the case that it will turn into support. However, we should give it some elbow space. The bullish outlook should still be valid even if price slides to 95.74, where the fibonacci retracement of 61.8% resides. A break below 95.50 would likely turn AUD/JPY back to a sideways market. The 96-96.10 area also has a high chance of providing support. It is where some of the previous highs in April through August reside and where the 50-day SMA resides.
Otherwise, if price can hold above 95.74 and stay north of 96.00 for the most part, the bullish outlook remains toward the 99.00 and 100.00 levels.
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