AUDJPY hit a 4-week high yesterday, peaking at 83.36, but the upswing met resistance at the 50-day moving average. Prices have reversed sharply lower today but momentum indicators remain in bullish territory, suggesting fresh gains are still possible in the near term even though the immediate risk is to the downside.
Th RSI has dipped slightly lower today and is some way off from overbought territory. The stochastics are also pointing downwards but are holding near the 80-overbought level.
Should the pair resume its uptrend, the next resistance could from the bottom of the Ichimoku cloud around 83.80. A break inside the could would help shift the bearish medium-term picture to a more neutral one and bring the 84.40 resistance level into view. Climbing above this March high could provide enough upside momentum for prices to break above the cloud top around 85.25.
However, should today’s losses deepen, there could be support from the Kijun-sen and Tenkan-sen lines at 82.50 and 82.09 levels respectively. Further declines would drive prices towards March’s 16-month trough of 80.49. A breach of this low would signal a resumption of the medium-term downtrend that’s been in progress since late January.
