News & Analysis

Chart of the Day: AUDJPY – Potential price ceiling @76.80?

August 26, 2020

AUDJPY – 4HR

AUDJPY (4HR)

Today we are looking at AUDJPY on the 4hr time frame. Despite a more robust Aussie Dollar recovery since March earlier in the year, there appear to be warning signs that this bullish move could run out of steam in the short to medium-term.

Firstly, we can note the overall strength of the move higher by how well the price action has managed to stay above the 200 moving-day average line in blue, acting as a key support indicator several times this year.

However, if we study what happens when the bulls attempt a run at the 76.80 region highlighted by the arrow in white, it’s clear that the pair may be facing somewhat of a price ceiling after five failed attempts to break above this level since June.

As the pair heads back into this price territory, buyers will be assessing whether there is sufficient momentum left in this longer-term rally to carry the Aussie Yen towards higher ground or if sellers have gained the upper hand at these levels. A breach of 76.80 would most probably look to target the 80.00 price point seen in the earlier part of last year.

Finally, the last point to mention is the ever-so-slight bearish divergence forming on the chart’s RSI indicator. It’s another potential sign of an oncoming reversal. It may see the pair retest the 200-day moving average once again (currently sitting around 75.70) before drifting lower towards 74.50 and flattening the overall trend and looking like more of a range-bound picture longer-term.

By Adam Taylor CTEe

.@adamt_trading

Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg

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