AUD/JPY has performed well on the bid this week and there could be more to go. However, the W-formation on the daily chart is a compelling feature that could play out in a downside correction for the days ahead. While there is room to go until the next presumed resistance area, around 82.1580, the price is leaving a W-formation. This is a reversion pattern that has a high completion rate in that the price would be expected to retreat in due course and restest the neckline of the W-pattern. This is between the wick of Dec 2 and the opening of the same candle 80.5630 and 80.2452.

The risk barometer pair recently benefited from upbeat China Consumer Price Index (CPI) and Producer Price Index (PPI) data but a challenge to sentiment joins descending trend line from November 01 to probe buyers.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

That said, the quote’s sustained trading beyond 61.8% Fibonacci retracement (Fibo.) of August-October upside joins upward sloping Momentum line to keep buyers hopeful of overcoming the immediate trend line resistance, near 81.60 at the latest. Though, the 100-DMA and September’s high, respectively around 81.80 and 82.00, will act as additional resistances before directing the AUD/JPY prices to the 200-DMA level of 82.80.

On the flip side, pullback moves will initially eye the 61.8% Fibo. level of 81.08 and the 80.00 threshold before convincing the bears.

Following that, a broad horizontal area from August 20, between 78.60 and 78.85, will test the AUD/JPY sellers.

Aussie Dollar Dominates Japanese Yen above 81.0

Dec 10 2021

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