Forex Technical Update

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AUD/JPY 4H Chart 10/7/2012 7:30PM EDT

AUD/JPY 10/7/2012 4H chart

Bearish continuation? AUD/JPY held under 81.00 last Friday (10/5), and is starting this week with heavy price action around the 80.00 psychological handle. The 4H chart shows price respecting a projected resistance, which is parallel to the support speed line. Also, the 4H RSI reading held under 60 and reflects maintenance of the bearish momentum. However, if price can hold above 80, and if the RSI can stay above 40, the mode could be turning from bearish consolidation, which could be sideways or even turn bullish.

Key support: On the other hand, going in the direction of the trend since mid-September, the AUD/JPY does not have much more room to fall under 80 before it meets an area of key support. As the daily chart shows, The 79.35-79.65 area has provided support since first established as such on 6/25/2012.

Slightly bearish mode in daily chart: The mode of the market is unclear in the daily chart. The moving averages are indicative of non-directional trading. However, the daily RSI reading shows bearish overall bias, as it has tagged 30, and mostly remained under 60. The latest dynamic has been almost a kiss of 30, and then rejection at 60, and now heading below 40.

This suggests that while the bearish outlook is not strong, any bullish outlook should also be limited. At the moment, the most aggressive bullish outlook from the 79.35-79.65 support zone should be limited to 82, 200-day SMA, as well as a declining trendline.

A break below 79.35 opens up a lot of space down towards the 2012-low at 74.47.

AUD/JPY Daily Chart 10/7/2012 7:35PM EDT

AUD/JPY 10/7/2012 daily chart

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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