2/14/2008 â€“ AUD/JPY â€“ After a significant run-up in the last 3 to 4 weeks resulting from a bounce off the long-term uptrend line, price on the AUD/JPY daily chart, as shown, is approaching a confluence of several different resistance factors. This strong confluence of resistance is displayed on the chart by the simultaneous intersection of two downtrend lines (in red), an uptrend line (in green), and a horizontal support/resistance line (in yellow), all currently in the general 98.50 region. This is not to say that price will definitely turn back down at or near this level, especially since the AUD/JPY carry trade appears finally to be coming back on track. But from a purely technical perspective, this price zone represents a significant support/resistance consideration. Oscillators like the displayed Stochastics, which are well in overbought territory, are also lending strength to the view that there may be an impending pause or correction in the current month-long rally. If price indeed turns at or near the abovementioned resistance zone, a significant support level to the downside resides around the 93.00 region, and then further down at the long-term uptrend line (in green).
Chief Technical Analyst
(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance lines in yellow; 200-period simple moving average in light blue.)
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