Technical Analysis – AUDJPY extends correction, flirts with 50-SMA

Anthony Charalambous, XM Investment Research Desk

AUDJPY plotted five days of gains after a four-month decline to a 10 1/2-year low of 69.94. The bulls are currently facing some downside pressure from the 50-day simple moving average (SMA) as well as the near downtrend line.

The indicators are reflecting an increasing bullish momentum, with the MACD rising in negative territory, distancing itself above its red trigger line, while the upward sloping RSI has inclined into bullish areas.

If the bulls manage to surpass the 50-day SMA and the downtrend line, the next resistance could come from the 38.2% Fibonacci retracement level of the down leg from 80.70 to 69.94, of 74.04. Moving higher the 50.0% Fibo of 75.32 could provide some pressure, once the 100-day SMA is overcome. If buying interest persists above the swing high of 76.27, focus could turn to the 76.59 level, which is the 61.8% Fibo.

If the downtrend line holds, the bears could initially attempt to test the 23.6% Fibo of 72.49, before eyeing the 71.00 psychological number, once the 71.86 support and 21-day SMA are breached. Another push lower could test the 70.27 support ahead of the recent low of 69.94.

Overall, the medium-term bias remains bearish. For the short-term bias to turn positive-to-neutral, the price would need to close above the 76.59 level.