Weak Rally: Although AUD/JPY has been rallying in February from a low around 89.50 to a high near 94.00 this week, the rally has been very tentative. The 4H chart below shows a rising wedge since mid-February.
During this rally, note that the RSI has not been able to tag 70, which shows lack of bullish momentum. Price action has crossed over the 200-, 100-, and 50-period SMAs, but a break below 93.00 would break below these SMAs as well as the rising wedge. The technical picture would revive a bearish bias. If the RSI also falls below 40, we are likely in a bearish continuation first towards a support area around 91.50, then the low on the year around 89.50.
Bearish Prevailing Trend: The prevailing trend since November 2014 has been bearish, so if price does fall back towards 89.50-90 area, we might see further downside risk. Check out the daily chart below:
Trendline Resistance: Here we can see that price is flirting with a falling trendline from the November high of 102.84. While price seems to have above the trendline, we can see that there is no clear bullish breakout as price stalls under 94.00. Note that price is still holding below the 50-day SMA, and the daily RSI reading is still under 60, which shows bearish bias and momentum in play. With the bearish trend intact, we should indeed look for a bearish continuation attempt if price does slide back below 93.00.
Bearish Outlook: On the weekly chart below, we can see that around 89.50, price would be testing the 200-week SMA. Below that, there is still room towards the 2014-low of 88.23, then the 2013-low at 86.40.
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