AUD/JPY Recovery Stalls at Resistance- Monthly Opening Range in Focus

2017-12-05 17:45:00

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AUDJPY/JPY recovery extends into near-term resistance confluence
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AUD/JPY Daily Chart

Technical Outlook: AUD/JPY has been trading within the confines a well-defined descending pitchfork formation extending off the yearly highs with prices trading into resistance today at the 38.2% retracement at 86.16. Note that the 200-day moving average also comes in just ahead of this level and a close above would be needed to keep the upside momentum going. That said, look for interim support / near-term bullish invalidation at the monthly open at 85.12.

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AUD/JPY 240min Chart

Notes: A closer look at price action highlights a near-term ascending pitchfork formation extending off the November lows with the upper parallel (blue) converging on the 38.2% retracement at 86.16. Look for interim support along the median-line with the lower parallel further highlighting the monthly open at 85.12- A break below this level would be needed to mark resumption of the broader downtrend targeting key support at 84.13/25.

A breach above this high would likely see accelerated gains for the pair with such a scenario targeting the upper parallel of the downslope / 86.77. Bottom line: near-term divergence into this confluence resistance level leaves the immediate advance at risk while below 86.16 with a break below this formation needed to mark the end of the recovery. Keep in mind we get the release of Australia 3Q GDP figures tomorrow.

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A summary of IG Client Sentiment shows traders are net-long AUDJPY- the ratio stands at +1.14 (53.2% of traders are long) – weak bearishreading
Retail has remained net-long since Nov 28; price has moved 1.1% higher since then
Long positions are 20.8% lower than yesterday and 8.5% lower from last week
Short positions are 21.5% higher than yesterday and 21.4% lower from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDJPY prices may continue to fall. However, traders are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed AUDJPY trading bias from a sentiment standpoint.

See how shifts in AUD/JPY retail positioning are impacting trend- Click here to learn more about sentiment!

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