The Australian Dollar has rallied nearly 2% against the Japanese Yen since the March lows with the advance taking price into near-term confluence resistance. We’re looking for a reaction at this pivot with a breach above needed to keep the immediate long-bias in play. That said, this inflection point could also prove terminal for the correction off the lows- for now the focus is on resistance at 82.15.

AUD/JPY Daily Price Chart

AUD/JPY Price Chart - Daily Timeframe

Technical Outlook: In this week’s Technical Perspective, we highlighted the broader outlook for AUD/JPY with our near-term focus on resistance into the 82-handle. Price is testing this range today. The daily chart isn’t all that impressive here but does highlight some key levels IF price breaks higher at 82.52 & the 83-handle.

Key support remains with the 61.8% retracement / low-day close at 80.57/58- a break below this threshold targets, “79.45 and the median-line confluence around 78.50s. Note that AUDJPY made a new multi-year low while AUDUSD has not; a disparity that often manifests itself at larger turns in price- keep a close eye here.

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AUD/JPY 120min Price Chart

AUD/JPY Price Chart - 120min Timeframe

Notes: A closer look at price action see’s AUD/JPY trading within the confines of a well-defined ascending channel formation with the upper parallel further highlighting resistance today around 82.15. Note that the momentum profile has exhibited a change in behavior with the oscillator finding support ahead of 40 after reaching its highest levels since mid-March (constructive).

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Bottom line: The immediate risk is higher but we’ll be looking for a near-term reaction here at confluence resistance. A breach above looks for a stretch into 82.52 & 83- both levels of interest for exhaustion. If we fail here again, look for interim support at 81.26 backed by the lower parallel, currently around ~80.95 (near-term bullish invalidation). Ultimately a break below 80.57 would be needed to mark resumption of the broader downtrend.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

AUD/JPY IG Client Positioning

AUD/JPY Client Sentiment
  • A summary of IG Client Sentiment shows traders are net-long AUDJPY- the ratio stands at +1.44 (59.0% of traders are long) –weak bearishreading
  • Retail has remained net-long since Mar 15th; price has moved 2.4% lower since then
  • Long positions are 1.8% higher than yesterday and 12.8% lower from last week
  • Short positions are 13.0% lower than yesterday and 17.9% 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUDJPY-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in AUD/JPY retail positioning are impacting trend- Learn more about sentiment!

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Relevant Data Releases

AUD/JPY Economic Calendar

Other Setups in Play

- Written by Michael Boutros, Currency Strategist with DailyFX

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