AUD/JPY looks terrible but beware getting overly bearish
AUD/JPY has looked terrible since breaking the uptrend established in April earlier this month, slicing through a series of supports and the important 50-day moving average. Souring sentiment regarding China’s economic outlook has been a major factor behind the unwind, combining with narrowing yield differentials between the United States and Japan, along with weakness in global equities, to hammer AUD/JPY lower.
AUD/JPY now finds itself testing horizontal support at 102.64, the last visible level on the charts before a potential retest of major uptrend support dating back to March 2023. That’s currently found at 100.75. Momentum is with the bears, with RSI yet to break its downtrend while MACD continues to signal downside risks.
The only thing making me hesitant to short is AUD/JPY is now oversold on RSI (14). And when you look back at other recent episodes when the pair has been this oversold, its often coincided with a near-term market bottom. As such, I’m waiting for the price action to tell me what to do.
If support fails, sell a clean break of 1.0264 with a tight stop above the level for protection. The initial target would be the major uptrend around 100.75. Alternatively, should support hold, buy with a tight stop below 1.0264 for protection. 104 is one potential target with 104.95 after that.
DS
AUD/JPY now finds itself testing horizontal support at 102.64, the last visible level on the charts before a potential retest of major uptrend support dating back to March 2023. That’s currently found at 100.75. Momentum is with the bears, with RSI yet to break its downtrend while MACD continues to signal downside risks.
The only thing making me hesitant to short is AUD/JPY is now oversold on RSI (14). And when you look back at other recent episodes when the pair has been this oversold, its often coincided with a near-term market bottom. As such, I’m waiting for the price action to tell me what to do.
If support fails, sell a clean break of 1.0264 with a tight stop above the level for protection. The initial target would be the major uptrend around 100.75. Alternatively, should support hold, buy with a tight stop below 1.0264 for protection. 104 is one potential target with 104.95 after that.
DS
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