AUD/JPY - Stalking Triangle Congestion
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  • 4H: The AUD/JPY pair is stuck in a congestion pattern, again. After a hitting 79.20 at the start of August, the pair pair developed a triangle pattern. Then the market brought down the AUD/JPY to 75.80, before entering what appears so far as a triangle again.
  • If so, we are current in wave d. Because of the negative reversal with the RSI - when the RSI high is higher, but the price high is lower - I believe there should be some further decline. Therefore, I believe wave d is not complete, and then wave e may follow to complete the triangle.
  • Overall, the momentum appears to be bearish, as the RSI dipped into the oversold area and has since not been able to rise above 60.
  • Interestingly, the market appears to be in a congestion pattern, possibly a triangle as well in the daily/weekly time-frames.

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  • Day: The daily time-frame shows the market in congestion/consolidation. Using the highs and lows, it appears to be a triangle. However, there could be a channel as well. If volatility declines, the market is likely to stay in congestion. The ATR, which is not shown in this chart has been steadily declining since the beginning of June.
  • Currently, the market is in the middle of the congestion. However, it is coming off topping action and has bearish bias.
  • The RSI is showing bullish divergence, which was followed through by some bullish attempts. However these attempts developed a negative reversal, and suggests a target at X, which is near the 71.00 level. This projection or at least direction, is reinforced by the completion of a Gartley retracement pattern. The market successfully broke below a minor rising support to complete this Gartley and give a bearish signal.
  • The short-term target is &, which is near the 74.50 area, 78.6% retracement level.

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  • Week: The weekly chart also shows the market in a triangle. This triangle develops after a strong decline.
  • The RSI has risen from oversold area, but failed to break above 60 and sustain it in 2009. The RSI in 2010 has declined to 40, but is not breaking yet. There is a slight negative reversal signal, but since the RSI is still above 40, it is weak.
  • 2010 also saw the pair hit 200-period Simple Moving Average, and plunge. The 200SMA vs. 50SMA orientation is still bearish, and the gap appears to have stopped narrowing. The SMA 50 has flattened from a positive slope.
  • It appears that all the time-frames are lined up to be bearish, although the momentum is lacking currently. I will continue to track this pair, and if the triangle in the 4H chart is complete, targets will be assessed.

  Fan Yang
Currency Analyst
Commodity Trading Advisor

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