Featured Trade: AUD/JPY retreated from range top

AUD/JPY may see a further push down from 79.85 range top.

Short-term technical outlook on AUD/JPY (Tues 26 Feb)



click to enlarge charts

Key elements

  • The recent recovery of 910 pips from its 03 Jan 2019 flash crash low of 70.66 has led the AUD/JPY cross pair to retest the pull-back of the former long-term secular “symmetrical triangle” range support now acting as resistance at 79.85. It has failed to stage a bullish break above it thrice; on 05 Feb, 21 Feb and 25 Feb 2019 (see daily & weekly charts)
  • In addition, the daily RSI oscillator also has started to retreat for a significant corresponding resistance at the 60 level.
  • In the shorter-term, the AUD/JPY has formed a toppish “Expanding Wedge” range configuration right below the 79.85 resistance in motion since 15 Feb 2019 minor low of 78.07. The lower boundary of the “Expanding Wedge” is now acting as a support at 78.50 (see 1-hour chart).
  • The hourly Stochastic oscillator has continued to inch downwards after the bearish divergence signal at its overbought zone. It is now fast approaching an extreme oversold level which indicates the price action of the AUD/JPY may shape a minor bounce at this juncture (above 79.20) towards the intermediate resistance at 79.50 (61.8% Fibonacci retracement of the recent slide seen from 25 Feb 2019 high to today, 26 Feb Asian session low of 79.20.

Key Levels (1 to 3 days)

Intermediate resistance: 79.50

Pivot (key resistance): 79.85

Supports: 78.50 & 77.50

Next resistance: 81.20

Conclusion

If the 79.85 key pivotal resistance is not surpassed, the AUD/JPY is likely to stage another round of potential slide to test the lower boundary of the minor “Expanding Wedge” at 78.50. An hourly close below 78.50 shall open up scope for a further push down towards the medium-term range support at 77.50.

However, a clearance above 79.85 invalidates the bearish scenario for a squeeze up towards the next intermediate resistance at 81.20 (former minor swing low areas of 21 Nov/07 Dec 2018).

Charts are from eSignal


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