Technical Sentiment: Bearish

Key Takeaways

• Aussie gained against a basket of currencies on a slow Monday;
• AUD/JPY bounced near 93.00, May 2014 support;
• Trend remains bearish, with Lower Highs and Lower Lows; price stays below 200-Day SMA.

Aussie bulls dominated on Monday as the pair scored large gains against most counterparts. With previous 94.30 support now turning into resistance, it remains to be seen if this reaction was a one shot deal or if buyers will continue higher in their search for a suitable Lower High.

Technical Analysis

Aussie initially slipped lower against its Yen counterpart in early hours of the Asian session, only to completely turn around after briefly touching May 2014 Low near 93.00. Despite this rally, price action remains indicative for a downtrend. AUD/JPY is currently trading around 94.10, in bearish territory below the 200-Day Simple Moving Average. Furthermore, having priced in the first Lower Low of 2014, any rallies should be seen as chances to sell the pair.

With plenty of resistance clusters above, the path of least resistance clearly signals deeper losses for AUD/JPY in the near future, with 91.00 being one of the strongest attraction points for bears in coming weeks. That being said, oversold conditions warned of a possible AUD/JPY bounce and now that we’re getting one the only question that remains unanswered is: which resistance will provide the Lower High?

In recent hours AUD/JPY touched 94.30, previous support level and price pivot zone dating back over a year. So far 94.30 kept buyers in check during the U.S. session, however we cannot exclude a cross-over followed by a re-test of 200-Day SMA at 94.60, alternatively 95.10 (38.2% Fib line and Daily lows cluster). 96.50, 61.8% fib coupled with a huge pivot zone, would be the highest resistance where the newly found downtrend remains intact.

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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets