AUD & USD vs Japanese Yen Technical Forecast
- USD/JPY & AUD/JPY trade in a clear direction after a sideways move
- Key levels and signals to consider
Interrupted Momentum
On Wednesday, the US Dollar declined against the Japanese Yen to 106.36 – its lowest level in six weeks. However, the price rallied after, as some bears seemed to cover. Meanwhile, the Australian Dollar took off against the Japanese Yen to a near eight week high at 70.17. Yet, the price retreated after as some bulls seemed to cut back.
This week, the Relative Strength Index (RSI) has risen from 38 to 44 on USDJPY highlighting a weaker bearish move. On the other hand, the oscillator has fallen from 61 to 53 on AUDJPY reflecting a weaker bullish momentum.
USD/JPY DAILY PRICE CHART (AUg 15, 2018 – May 1, 2020) Zoomed out
USD/JPY DAILY PRICE CHART ( MaRch 5 – May 1, 2020) Zoomed in
Looking at the daily chart, I notice that on April 6, USD/JPY corrected its uptrend then traded in a sideways move creating a lower high with a higher low. On April 24, the price declined to the current trading zone 105.50 -107.55 and produced a bearish signal. Yesterday, the market failed to rally back to the higher zone and generated another bearish signal. Therefore, the pair could fall to the low end of the zone.
A close below the low end of the aforementioned zone reflects a stronger bearish sentiment and this could send USDJPY towards 104.72. A further close below that level may encourage bears to press towards 103.50. That being said, the weekly support levels underlined on the chart (zoomed in) should be considered.
On the flip-side, any close above the high end of the zone signals bear’s hesitation and this may cause a rally towards 109.00. A further close below that level could extend this rally towards 110.52. In that scenario, the weekly resistance levels marked on the chart should be kept in focus.
AUD/JPY DAILY PRICE CHART (June 1, 2018 – May 1, 2020) Zoomed out
AUD/JPY DAILY PRICE CHART (FEB 25 – May 1, 2020) Zoomed In
From the daily chart, I noticed that on May 31 AUD/JPY corrected its downtrend then traded in a sideways move creating a lower high with a higher low. On April 6, the market closed above the 50-day moving average and generated a bullish signal. Two days later, the price rallied then stuck in the current trading zone 67.18 – 70.21.
Yesterday, the market rebounded around the high end of the zone then reversed its direction eyeing a test of the low end. A close below the low end could press AUDJPY towards 64.08. A further close below that level may send the price even lower towards 61.67. In that scenario, the weekly area and levels underscored on the chart (zoomed in) should be monitored.
In turn, a close above the high end of the zone may encourage bulls to push towards 71.87. A further close above that level could point the price higher towards 75.27. Although, the weekly resistance levels printed on the chart should be watched closely.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
