Featured Trade: AUD/JPY recent rally stalled right below key short term resistance

The AUDJPY is now right below short-term inflection zone of 80.65/80 for a potential bearish reversal

Short-term technical outlook on AUD/JPY (Fri 14 Sep)



Key elements

  • The recent push up of 213 pips from its 78.67 low printed on 08 Sep 2018 is now hovering right below a key short-term resistance of 80.65/80 which is defined by a confluence of elements. The former range support of a multi-month sideways configuration from 23 Mar/28 Jun 2018, the minor descending trendline from 31 Jul 2018 and close to the 38.2% Fibonacci retracement of the down move from 31 Jul 2018 high to 03 Sep 2018 low of 78.67 (see daily & 1 hour charts)
  • The daily RSI oscillator has reached a corresponding significance resistance at the 50 level without any prior clear bullish divergence signal coupled with the shorter-term hourly Stochastic oscillator that has started to reverse down from an extreme overbought level of 91. These observations suggest that the recent upside momentum of price has eased and the AUD/JPY may resume its down move.
  • The intermediate support rests at 79.50 (the former minor swing highs of 07/11/12 Sep 2018 follow by the medium-term support of 78.50 which is defined by the lower boundary of the descending channel in place since 21 Sep 2017 high and a Fibonacci projection cluster.

Key Levels (1 to 3 days)

Pivot (key resistance): 80.65/80

Supports: 79.50 & 78.50

Next resistance: 81.75/82.05

Conclusion

The AUD/JPY may see a potential bearish reversal if the 80.65/80 key pivotal resistance is not surpassed to target the near-term/intermediate support at 79.50. A break/hourly close below 79.50 is likely to reinforce the start of another potential downleg towards the medium-term support of 78.50.

On the flipside, a clearance above 80.80 invalidates the bearish scenario to see a continuation of the corrective up move towards the next resistance at 81.75/82.05 (the congestion area of 24 Jul/28 Aug 2018).

Charts are from eSignal



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