- Summary:
- The AUD/JPY is in retracement mode, but this corrective decline could set up a new buying opportunity to target $100.
The AUD/JPY pair is trading lower this Friday on the back of profit-taking by bulls who want to cash out from positions that have benefitted from the weakness of the Japanese Yen. The Yen had been under pressure throughout the week, but concerns about China’s COVID-19 situation put pressure on commodity-associated currencies, leading to a pullback.
For the Aussie Dollar, this manifested as two pinbars with progressively lower highs at the 95.764 resistance, indicating that the upside movement had stalled. Friday’s bearish candle, showcasing a 69 pip drop, confirms the weaker sentiment on the AUD/JPY. This move is a corrective decline, and a pickup in risky sentiment sets up the opportunity for the pair to resume the uptrend. This move would depend on its clearance of the 6-week high at 96.965.
AUD/JPY Forecast
The breakout move from the bullish pennant pattern on the daily chart has met resistance at the 95.764 price mark (the previous high of 20 April 2022). The rejection at this resistance has led to a pullback that has its sights on the 94.002 support level (6 June and 19 July lows).
The bulls would need to force a bounce from this area, targeting to break this resistance to make 96.965 available as the next target. This 8 June 2022 high is a pitstop. The psychological price mark at the 19 May 1997 top forms the additional target at 100.168. But before then, the bullish pennant pattern is expected to attain completion at the 98.727 resistance, the site of a prior high seen on 15 September 2014.
On the flip side, the bears would get some tailwinds from a breakdown of the 94.002 price mark. This decline targets the 90.880 support level (1 April 2022 low), but not before transcending the 16 June/12 July 2022 lows, which sync up at 92.00, a psychological pivot. 89.252 (18 May/24 May lows) form an additional target to the south before the 21 March and 18 May lows at 87.943 enters the mix as another harvest point for the bears.
AUD/JPY: Daily Chart
