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AUDJPY at 38.2% payback for 2018

Market Analysis

AUDJPY, H4 and Daily

AUDJPY logged a fresh month’s high of 84.37, reaching close to the 38.2% level of the losses seen of the down-leg from 88.90 to 81.48. A position close on the Tokyo Stock Exchange, and modest gains in U.S. index futures and on European bourses have been helping keep the yen on a back foot. In the bigger view, the yen has been trading in a relatively narrow sideways pattern over the last week against the US Dollar, but not versus Aussie and Euro, which lifted to 2 weeks highs. There have been yen bullish market narratives in circulation this year rooted on the expected impact that the BoJ’s eventual withdrawal from ultra-accommodative monetary policy will have, though recent parliamentary testimonies of BoJ members suggested the focus of policymakers remains squarely on the chronically benign inflation picture.

The AUDJPY, rebounded well above 20-DAY MA, breaking the 2 weeks up fractal after yesterday’s doji closing. Technically-wise, there are some strong signals that suggest the recovery possibility of the pair. This comes with the fact that pair is traded bullishly in the upper Bollinger Bands pattern for 2 consecutive Daily, with support coming at between 20-DAY MA and 23.6% Fibonacci level, at 83.30.-83.55, but also with the positive picture out of momentum indicators. The Daily Stochastics are now accelerating above 50, with strong positive configuration, while MACD on the other-side, is still negative, however decrease to the negative momentum has been identified, with signal lines reducing. Meanwhile RSI is sloping upwards as well, but only a break above 50 could provide another bullish signal for the pair in such long term time-frame.

The 4-hour chart shows a strong uptrend channel, with pair forming high highs and higher lows. Additionally, a bullish crossover buy signal was spotted on Friday, on the moving averages, with 20-period MA crossing above 50-period MA. All 3 technical indicators in this timeframe suggest upwards momentum, since both RSI and Stochastics are moving within the overbought zone, while MACD remains positive.

Hence, the next resistance is really close at the 38.2% Fibonacci level at 88.37. If bulls manage to break strongly well above this level, then this would open up upside towards 200-period MA, at 84.84, and 50.0 Fibonacci level at 85.25.

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Andria Pichidi

Market Analyst


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