Technical Analyst, Saxo Bank
Summary: JPY is being strengthened against AUD and USD. AUDJPY testing key support in what could be a reversal pattern indicating must lower levels. USDJPY below key support resuming medium-term down trend
AUDJPY is testing the key support and Neckline in the Shoulder-Head-Shoulder like pattern the pair has formed over the past year (see previous AUDJPY Technical Update).
If AUDJPY breaks below Neckline support at around 87 there is a “rule of thumb” downside medium-to longer term to around 75.50 – dashed lines. However, there is strong support at around 80.47 and the 0.618 Extension level at around 80. 200 weekly MA currently at 81.56 will also offer support.
Weekly RSI is still holding on above 40 threshold i.e., still showing positive sentiment . A AUDJPY break below the Neckline will change that picture.
For AUDJPY to demolish the medium-term bearish picture a close above 83 is needed.
USDJPY closed Friday below key support at around 132.90 after testing it a couple of times. USDPY is testing the 0.618 retracement of the January-February uptrend and the lower Cloud span (circled) that offers some support. However, short-term trend is down, AUDJPY is below all Moving Averages and RSI is below 40 i.e., negative sentiment, indicating lower levels for USDJPY.
If USDJPY drops below the Cloud i.e., below today’s low at around 132.20 a sell-off down to support at around 127 is in the cards.
For USDJPY to reverse this bearish scenario a close above 137.91 is needed.
Medium-term USDJPY is technically still in a downtrend. Rejected at the 0.382 retracement selling pressure has resumed. Weekly RSI is still negative suggesting USDJPY could drop below strong support at around 127. To reverse medium-term trend a close above 137.91 is needed.
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