AUD/JPY – Rising Wedge Presents Opportunity for Sellers

AUD/JPY - Rising Wedge Presents Opportunity for Sellers

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.

AUD/JPY 4H Chart 3/5
audjpy 4h chart 3/5
(click to enlarge)

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:

AUD/JPY Daily Chart 3/5
audjpy daily chart 3/5
(click to enlarge)

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.

AUD/JPY Weekly Chart
audjpy weekly chart 3/5
(click to enlarge)

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at