AUDJPY recently broke past a descending triangle pattern on the 4-hour time frame, indicating that further gains are likely. However, price found resistance at 85.00 and is showing signs of a correction to the broken resistance.
Using the Fib tool on the latest swing low and high shows that the 50% level lines up with the broken triangle resistance, which is also near the moving average dynamic inflection points. For now, the 100 SMA is below the 200 SMA so the path of least resistance might still be to the downside.
RSI is on the move down to sellers are still in control, likely to take AUDJPY down to the correction zone around the 82.00 major psychological level. Stochastic is also moving south but is near the oversold level so a bounce might take place soon, bringing the pair up the recent highs at 85.00 and beyond.
Earlier in the week, China printed a weaker than expected trade balance, as it indicated a larger deficit brought forth by declining imports and exports. This weighed on the Aussie and overall risk sentiment, suggesting weaker demand for commodities and a slowdown in the world’s second largest economy.
Up ahead, the Chinese CPI is up for release and this could continue to affect AUDJPY movement. Data from Japan has been mostly weaker than expected, so demand for the yen is also minimal unless risk aversion stays in the markets.
A move below the Fib levels could put AUDJPY back on track towards testing the triangle support at 80.00, which has held since the start of the year.
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