Chart Of The Day - AUD/JPY may see another bearish breakdown

AUD/JPY is still exhibiting bearish elements below 84.18 key short-term resistance.

Short-term technical outlook on AUD/JPY (Wed, 28 Feb)



Key technical elements

  • Since the bearish breakdown of its former medium-term ascending trendline from Jun 2016 low on 07 Feb 2018, the AUD/JPY has continued to inch downwards to print a low of 83.30 on 14 Feb 2018 before it has started to trade sideways.
  • Despite evolving in a sideways environment since 14 Feb 2018, the cross pair has continued to exhibit bearish elements. It has started to trace out a bearish continuation “Descending Triangle” chart pattern within a short-term descending channel in place since 23 Jan 2018 high (see 1 hour chart).
  • The daily RSI oscillator continues to hover around the oversold region and still has further room to manoeuvre to the downside before it reaches an extreme oversold level of 20% seen on Aug 2015. These observations suggest that medium-term downside momentum of price action remains intact.
  • The key short-term resistance stands at 84.18 which is defined by the aforementioned “Descending Triangle” range resistance and the 23.6% Fibonacci retracement of the recent decline from 07 Feb 2018 minor high to 14 Feb 2018 low (see 1 hour chart).
  • The next significant short-term support rests at 82.60/25 which is defined by lower boundary of the short-term descending channel from 23 Jan 2018 high and the 1.00 Fibonacci projection of the down move from 23 Jan 2018 high to 06 Feb 2018 minor low projected from 07 Feb 2018 minor high.

Key levels (1 to 3 days)

Intermediate resistance: 83.80

Pivot (key resistance): 84.18

Supports: 83.40 & 82.60/25

Next resistance: 85.50/90

Conclusion

Therefore as long as the 84.18 key short-term pivotal resistance is not surpassed and a break below 83.40 (the “Descending Triangle” support) is likely to reinforce a further potential downleg to target the next near-term support at 82.60/25.

On the other hand, a clearance above 84.18 should put the bearish bias on hold a mean reversion rebound to retest 85.50/90 zone (the pull-back resistance of the former ascending trendline support from Jun 2016 low).

Charts are from eSignal



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