AUDJPY is looking increasingly neutral in the short term as the pair continues to consolidate from its 1½-year high of 89.41 set in July. Prices have moved back inside the Ichimoku cloud after finding resistance at the top of the cloud, as well as from the 23.6% Fibonacci retracement level of the June-July upleg from 81.77 to 89.41.
The RSI has dipped back to the 50 neutral level after a brief climb to 59.75 on Friday. The MACD is just about positive with a slightly bullish tilt as it’s above the red signal line. Should the pair attempt another upside push, the 23.6% Fibonacci level at 87.60 will likely again act as resistance. Friday’s 3½-week high of 87.93 is the next resistance to watch, followed by the previous congestion area of around 88.20. A break above this level would open the way towards the July top of 89.41.
Alternatively, if prices turned lower, immediate support would come from the tenkan-sen line at 86.80. Further losses would bring into view the 38.2% and 50% Fibonacci levels at 86.50 and 85.60 respectively. A breach of the 50% Fibonacci level could accelerate the declines towards the 200-day moving average, currently at 85.38, and the 61.8% Fibonacci level at 84.70. It would also shift the bias to negative as it corresponds with the bottom of the cloud.
In the medium term, the outlook remains bullish given the positively aligned 50- and 200-day moving averages. However, without a successful challenge of July’s 1½-year high, the positive outlook would be at risk of turning neutral.
