CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Featured Trade Bearish sightings in AUDJPY ahead of FOMC

Article By: ,  Financial Analyst

Short-term technical outlook on AUD/JPY (Wed 19 Dec)



Key elements

  • Since its 03 Dec 2018 high of 84.03, the risk aversion sensitive AUD/JPY cross pair has started to integrate back below the median line of its medium-term descending channel in place since 21 Sep 2017 high of 90.30. This price action behaviour suggests a failure bullish breakout on its prior thrust up movement seen on 29 Nov/03 Dec 2018.
  • Interestingly, it past 6 weeks since 09 Nov 2019, the pair has started to evolve into an impending minor bearish reversal “Head & Shoulders” configuration with its neckline support at 80.55.
  • Momentum indicators are negative where the daily RSI oscillator is now breaking below a significant corresponding support at the 46 level after a prior bearish divergence signal seen 2 weeks ago. The shorter-term 1 hour RSI oscillator remains below its resistance at the 52 level. These observations suggest a revival of downside momentum of price action.
  • The key short-term resistance stands at 81.30 which is defined by the upper boundary of a minor descending channel that is taking form since 03 Dec 2018 high of 84.03.

Key Levels (1 to 3 days)

Intermediate resistance: 81.06

Pivot (key resistance): 81.30

Supports: 80.55 (trigger), 79.80 & 78.90/75

Next resistance: 82.35/50

Conclusion

The risk aversion sensitive AUD/JPY cross pair has traced out negative technical configurations ahead of today, 19 Dec Fed FOMC meeting.  A break below 80.55 (the neckline support of the bearish Head & Shoulders) is likely to open scope for a potential impulsive down move to target the near-term support of 79.80 follow by the long-term key support zone of 78.90/75 (the cyclical “triangle-liked range” support from Oct 2008 low, swing lows area of 07 Sep/25 Oct 2018, the lower boundary of the minor descending channel from 03 Dec 2018 high & 1.00 Fibonacci extension of the decline from 03 Dec 2018 high to 10 Dec 2018 low projected from 14 Dec 2018 high).

On the other hand, a break above 81.30 sees another round of choppy corrective rebound to retest the 82.35/50 resistance (swing high area of 01 Oct 2018 & the median line of the medium-term descending channel from 21 Sep 2017 high).  

Charts are from eSignal



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