Technical Sentiment: Bearish
Key Takeaways
AUD/JPY exhibits a decent sell opportunity as a trendline rejection and the recent bearish swing configuration are respected by the market to the pip. A continuation below 95.15, the current target for sellers, will mark the beginning of an even larger bearish swing.
Technical Analysis
Recent price action indicates the bullish rally from 93 to 96 has not only slowed down, but it is also reversing. The first weakness was identified after a false break above the resistance at 96.10, immediately followed by price dropping below the support trendline. In a very predictable manner, AUD/JPY has re-tested the trendline, formed a short term Lower High and it is now building further bearish momentum.
The main support level area is formed around 95.06 (38.2% Fibonacci Retracement level between 93.03 and 96.31) up to 95.20 (17th June low). In-between, the 200 Simple Moving Average on the 4H time frame further confirms this area as the separation line between bullish and bearish territory. A break below the support cluster will accelerate losses towards 94.30; a pivot zone from May coupled with 61.8% Retracement level.
Free Reports:
The secondary scenario entails a bounce off the support cluster. In this case AUD/JPY should be viewed as range-bound between 95.10 and 96.10. Waiting for a break-out outside these boundaries remains the preferred trading strategy considering the size of the range.
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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets
