AUD/JPY breaks below key support of 84.50
|AUD/JPY traded lower on Thursday, breaking below the key support (now turned into resistance) barrier of 84.50. The rate has been printing lower highs since October 21st, but it had never fallen below the 84.50 zones since then. Yesterday’s slide confirmed a lower low and, in our view, signaled a short-term trend reversal.
At the time of writing, the rate is hovering slightly above the 83.80 barriers, marked by the inside swing high of October 12th, the break of which may encourage the bears to take the action down to the 83.00 zones, which provided support on October 12th. If they are not willing to stop there either, then a break lower could see scope for declines towards the 82.10 area, near the inside swing high of October 8th.
Shifting attention to our short-term oscillators, we see that the RSI has flattened near its 30 lines, but the MACD remains below both its zero and trigger lines, pointing down. Both indicators detect downside momentum and support the notion for further declines, but the flattening of the RSI makes us careful over a possible small rebound before the next leg south.
We will abandon the bearish case only if we see a return above the 85.20 zones, marked by yesterday’s high. The rate will already be above the reversal point of 84.50 and may climb towards the 86.05/23 territory, marked by the highs of October 21st, 27th, and November 1st. A break higher would confirm a forthcoming higher high on the daily chart and may see scope for extensions towards the 86.75 barriers, or even the 87.50 hurdle, marked by the highs of February 6th and 5th, 2018, respectively.
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