Technical Sentiment: Bearish
Key Takeaways
The AUD/JPY is seeing a quick reversal on Wednesday as Australian Dollar was sold-off broadly across the board. A break below 98.00 will likely be a catalyst for extended losses down to 96.50.
Technical Analysis
After a bullish swing spanning 3 weeks and 800 pips, from 16th October low at 91.74 up to 99.70 high priced today, AUD/JPY buyers are finally releasing their stronghold on the pair. This is the first true bearish reactions to a resistance level we have seen so far, coupled with a great location, as price bounced off a very strong price pivot area formed early in 2013. Later tonight, a continuation below 98.00 should provide sufficient confirmation that sellers are in change.
Spot is currently trading at 98.36 during the first half of 5th/11 U.S. trading session, testing daily lows from Monday and Tuesday. JPY weakness is also likely to take a temporary step back, with xxx/JPY pairs receding after touching major resistance levels on the daily timeframe.
Free Reports:
At last, Stochastic, showing overbought conditions that indicate a dire need for a correction, has a secondary confirmation in the shape of a large Bearish Engulfing price action bar. A Daily close below 98.30 is preferred, followed by a bearish break on Thursday. We see a large pivot level backed up by 38.2% Fibonacci retracement located at 96.50/66. This area is likely to be targeted within several trading days if price action confirmed a break lower.
Australian Employment Rate is expected to remain steady at 6.1%, which would leave our bearish AUD/JPY bias intact.
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Prepared by Alex, Currency Strategist at Capital Trust Markets