AUD/JPY Reversal Targeting Initial Support Hurdle
- AUDJPY at risk sub-86.82 - Key near-term support into 84.86
- Updated targets & invalidation levels
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Technical Outlook: AUDJPY turned last week from the December high-day close at 86.93 with the subsequent pullback now eyeing confluence support at the lower median-line parallel / 61.8% retracement at 85.02. The immediate downside bias is at risk heading into this region with a break below the monthly / yearly open at 84.25 needed to suggest a more significant turn is underway. Note that building bearish divergence on the weekly charts has me ultimately favoring a downside break. A breach through critical resistance at 87.55 would be needed to mark resumption of the broader uptrend.
Notes: A closer look at prices shows the pair trading within the confines of a near-term descending pitchfork formation extending off the monthly highs with the 50-line highlighting near-term resistance at 86.29/31 (note this is also the weekly open). Bearish invalidation is now lowered to the monthly high-day close at 86.82. Near-term support targets are eyed at 85.02 & 84.86 – both levels of interest for near-term recoveries.
Bottom line: from a trading standpoint, look to fade strength while within this formation towards the lower parallels with a break below 84.86 needed to keep the short-bias in play targeting 84.46 & the monthly open. A quarter of the daily average true range (ATR) yields profit targets of 20-23pips per scalp. Added caution is warranted heading into the Australia & Japanese CPI data later this week with the release likely to fuel volatility in the Aussie & Yen crosses.
Relevant Data Releases
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---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.