AUD/JPY has been on a hot streak for more than a week, piling on the gains and marching toward a key resistance zone.
The big question now is whether the Aussie has enough juice to break through, or if it’s about to run into a wall.
Let’s take a closer look at the 4-hour time frame:
The Aussie has had a solid run lately, boosted by growing Fed rate cut expectations, Australia’s hot inflation, and support from gold and Chinese equities. All of this gave the Aussie the upper hand over safe havens like the Japanese yen.
The yen, on the other hand, can’t seem to get much traction. Even with risk-off vibes and a softer dollar, traders are dialing back expectations for a Bank of Japan (BOJ) hike, leaving the currency stuck in neutral.
But that was last week. Now, all eyes are on this week’s catalysts, with Nvidia’s earnings and the U.S. core PCE report lined up to decide whether AUD/JPY bulls keep the upper hand or if the bears finally get their turn.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Australian dollar and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
AUD/JPY has been moving in a downtrend since late July, but it recently bounced from the 94.50 support area and is now testing the 96.00 level.
As you can see, 96.00 is right around the R1 Pivot Point (96.22), 200 SMA, and the top of a descending channel in the 4-hour chart.
We’re on the lookout for red candlesticks and a bearish bounce below 96.20, which sets AUD/JPY up for a possible dip to the 95.50 mid-range levels if not the 94.60 previous lows.
But if buyers keep the pressure on and price holds above 96.25, AUD/JPY could punch out of its downtrend and aim for higher levels like 97.00 or even 98.00.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
