Featured Trade: AUD/JPY bearish breakdown from medium term range support

AUD/JPY retraced back towards 81.20 pull-back resistance of former multi-month range support.

Short-term technical outlook on AUD/JPY (Tues 14 Aug)

Key elements

  • The AUD/JPY cross pair has staged a bearish breakdown from its 4-month plus of “rectangle” range configuration in place since 23 Mar 2018. The former range support is now acting as a pull-back resistance at 81.17/20 which also confluences with a Fibonacci retracement/projection cluster (see daily chart).
  • The daily RSI oscillator still has room to manoeuvre to the downside before it reaches at extreme oversold level of 23. In conjunction, the shorter-term hourly Stochastic oscillator has just started to inch down from an extreme overbought level of 91. These observations suggest that downside momentum of price action remains intact.
  • The next significant support zone to watch will be 79.30/78.50 which is defined by a confluence of elements. The long-term cyclical “Triangle” range support in place since Oct 2008, the lower boundary of the major descending channel in place since 21 Sep 2017 and a Fibonacci retracement /projection cluster.

Key Levels (1 to 3 days)

Intermediate resistance: 80.84

Pivot (key resistance): 81.20

Supports: 80.00 & 79.30

Next resistance: 82.07


Therefore as long as the 81.20 pivotal resistance is not surpassed, the AUD/JPY may stage another bearish impulsive downleg to retest its 13 Aug 2018 swing low of 80.00 before targeting the next support at 79.30.

On the other hand, a clearance above 81.20 invalidates the bearish breakdown scenario for a squeeze up towards the 82.07 resistance in the first step (the former minor swing low area of 02 Aug 2018 & the minor descending channel resistance from 19 Jul 2018 high).

Charts are from eSignal

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