- AUD/JPY reversal from technical resistance targeting key near-term inflection zone
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The Japanese Yen has rallied nearly 2% against the Australian Dollar as AUD/JPY reversed from confluence resistance earlier in the month. The pullback is now targeting a key support confluence / inflection zone just lower - here are the updated targets and invalidation levels that matter on the AUD/JPY charts. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
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AUD/JPY Daily Price Chart
Technical Outlook: In my latest AUD/JPY Weekly Technical Perspective we highlighted a critical resistance confluence at 83.00/05 with the immediate long-bias vulnerable while below this threshold. An ascending pitchfork extending off the October lows further highlights this key resistance range. A break below the median-line today in New York trade is now approaching the first major support zone at 81.23/34 - this region is defined by the 38.2% retracement of the advance off the yearly low, the 100-day moving average and the 100% extension of the decline off the monthly high. This region represents a key inflection zone in price and we’re looking for a reaction here today.
AUD/JPY 240min Price Chart
Notes: A closer look at price action shows AUD/JPY breaking below the October trendline early in the week with the decline now approaching confluence support at 81.23/34- looking for a reaction here. If this pullback is a simple correction, price would need to stabilize above this threshold into the close. A break below would expose the June low / lower parallel at 80.63 with the 61.8% retracement just lower at 80.28- both areas of interest for exhaustion / long-entries IF reached.
Initial resistance now stands back at the median-line backed by the weekly open at 82.40. Near-term bearish invalidation stands with the high-day close at 82.75- a breach / close above this threshold would shift the focus back towards topside objectives at 83.05 and 83.26.
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Bottom line: AUD/JPY is approaching a key near-term inflection zone at 81.22/34- with the broader outlook still weighted to the topside while within this formation. From a trading standpoint immediate risk is for a slip lower but we’re looking to fade weakness into these support targets with a breach above 82.75 needed to mark resumption towards the upper parallels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
AUD/JPY Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-short AUD/JPY - the ratio stands at -1.21 (45.3% of traders are long) – weak bullishreading
- Long positions are3.4% higher than yesterday and 7.8% higher from last week
- Short positions are 13.0% higher than yesterday and 16.5% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/JPY prices may continue to rise. Yet traders are more net-short than yesterday but less net-short from last week and the combination of current positioning and recent changes gives us a further mixed AUD/JPY trading bias from a sentiment standpoint.
See how shifts in AUD/JPY retail positioning are impacting trend- Learn more about sentiment!
Relevant AUD/JPY Data Releases
Active Trade Setups
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at email@example.com