Featured Trade: AUD/JPY testing resistance as BOJ looms

AUD/JPY may see a minor bearish reversal below key short-term resistance

Short-term technical outlook on AUD/JPY (15 Mar)


click to enlarge charts

Key elements

  • The recent minor rebound from its 08 Mar 2019 low of 77.70 has led the AUD/JPY cross pair to test a significant short-term resistance zone at 79.25/35 which is defined by the former “Expanding Wedge” range support from 15 Feb 2019 low, the minor descending trendline from 26 Feb 2019 high, the upper boundary of a minor bearish “Ascending Wedge” in motion since 08 Mar 2019 low and a Fibonacci retracement/expansion cluster (the 76.4% retracement of the recent slide from 26 Feb 2019 high to 08 Mar 2019 low & the recent rebound from 08 Mar 2019 low to 12 Mar 2019 minor high projected from 13 Mar 2019 minor low.
  • The 1-hour Stochastic oscillator has reached an extreme overbought level which increases the odds of a minor retracement in price action of the recent rebound seen from 08 Mar 2019 low.
  • The next significant near-term support rests at 78.35 which is defined by the minor congestion zone of 09/13 Mar 2019 and the 61.8% Fibonacci retracement of the entire rebound from 08 Mar 2019 low to 15 Mar 2019 current intraday high of 79.21 seen in the Asian session.

Key Levels (1 to 3 days)

Pivot (key resistance): 79.35

Supports: 78.80 (trigger) & 78.35

Next resistance: 79.85 (key medium-term pivot)

Conclusion

If the 79.35 key short-term pivotal resistance is not surpassed and a break below 78.80 (minor “Ascending Wedge” support) is likely to reinforce a decline to target the 78.35 support in the first step in the coming days.

However, a clearance above 79.35 invalidates the bearish scenario for a squeeze up to challenge the 79.85 key medium-term pivotal resistance (the minor swing high areas of 21/26 Feb 2019 & the pull-back resistance of the former long-term secular triangle range support from Oct 2008 low).

Charts are from eSignal



Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (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.