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Australian Dollar Price Action Setups: AUD/USD, AUD/JPY

Australian Dollar Price Action Setups: AUD/USD, AUD/JPY

James Stanley, Senior Strategist

Australian Dollar Talking Points:

  • The Aussie sprung back to life earlier in the week.
  • AUD/USD is holding above a key area of support, while AUD/JPY remains very near highs while trying to hold support along a short-term bullish trendline.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
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From famine to feast in a week. Well, feast might be overstated but the response in AUD/USD after setting a fresh two-year-low last Thursday is encouraging for bulls.

Just last Thursday, AUD/USD has plunged down for a fresh two-year-low. Prices pushed below a key retracement from a Fibonacci setup that spans from the 2020 low to the 2021 high, but buyers pulled the bid back-above that level by the end of the week. That elongated wick on the underside of last week’s candle has led to a continued bullish run so far this week, and prices have broken out of a falling wedge formation, which keeps the door open for bullish continuation strategies.

AUD/USD Weekly Price Chart

audusd weekly chart

Chart prepared by James Stanley; AUDUSD on Tradingview

Shorter-term, the big question is whether buyers can hold price above the .6850 spot of support. This was a swing-low in May and early-June before becoming resistance in July.

Given the recent breakout from the falling wedge formation shown on the four-hour chart below, a hold of higher-low support keeps the door open for topside continuation scenarios, with next resistance around the .7000 psychological level.

AUD/USD Four-Hour Price Chart

audusd four hour chart

Chart prepared by James Stanley; AUDUSD on Tradingview

AUD/JPY

While AUD/USD was setting that fresh two-year-low last week, AUD/JPY has remained in a bullish trajectory, helped along by Yen-weakness that’s remained as a dominant theme across FX.

Longer-term, the current zone of resistance is a notable one as it’s held the highs in April and again in June, with a bit of breach on that second test. There’s also the higher-low that printed after that second test, which opens the door for an ascending triangle formation which points to bullish breakout potential.

AUD/JPY Weekly Chart

audjpy weekly chart

Chart prepared by James Stanley; AUD/JPY on Tradingview

On a shorter-term basis, we can even see a support test taking place at a key spot on the chart of AUD/JPY. There’s a bullish trendline connecting lows going back to July 11th that’s now confluent with the psychological level at the 95.00 handle. A hold here keeps the door open for that breakout potential, with eyes on the top-end of the zone at 96.57.

AUD/JPY Four-Hour Chart

audjpy four hour chart

Chart prepared by James Stanley; AUD/JPY on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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