AUD/JPY tips its (bearish) hand after struggling at resistance

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AUD/JPY is one of those currency pairs that can chop around for periods of time, then one day switches on the momentum. And I suspect the market has tipped its hand to a downside move with yesterday’s bearish candle.

A resistance zone formed in April between 94.24 - 95.75 in April, where breaks above it have ultimately failed and the resistance zone gets respected one more. Since late October we have seen several failed attempts to break the resistance zone, and a bearish divergence formed on the RSI(2) ahead of yesterday's selloff. I suspect the high is now in place.

It closed below the 50-day EMA but found support at the monthly pivot point, so I’m now waiting for a break low to bring 92.89 (call it 93.0) and the monthly S1 (near 92.0 and its 200-day EMA) into focus.

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تعليق

So far so good, with AUD/JPY falling to an 8-day low yesterday. However, take note of the lows at 92.89 (the 'round number' of 93) and the daily RSI(2) is oversold below 10.

This is where timeframes matter - if one is trading from the daily chart, they'll need a wider stop to handle to day-to-day volatility of that timescale and hopefully remain short as it (hopefully) falls towards 92.0.

Yet countertrend traders may be interested around current levels, who want to seek a bounce on a lower timeframe.

Regardless, the core view remains bearish.