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


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

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.