AUD/JPY has been in a sliding mode since yesterday, and today, it managed to break below the upside support line drawn from the low of December 3rd. In our view, this has changed the short-term picture to somewhat negative. However, in order to get confident on a reversal, we would like to see a clear dip below 82.05.
Such a break could initially pave the way towards the low of December 22nd, at 81.27, the break of which may carry extensions towards the 80.35 zone, marked near the low of December 20th. Slightly lower lies the 79.84 zone, the break of which could see scope for declines towards the low of December 3rd, at 78.80.
Taking a look at our short-term oscillators, we see that the RSI lies below 50 and points down, while the MCAD runs below both its zero and trigger lines. Both indicators detect downside momentum and support the notion for further declines in this exchange rate.
On the upside, we would like to see a strong rebound and a clear break above 83.75 before we start assessing the bullish case again. This would confirm a forthcoming higher high on the 4-hour chart and may target the 84.30 barrier, marked by the high of January 5th, or the 84.50 zone, marked by the inside swing low of November 3rd. If neither barrier is able to stop the bulls, we could see them climbing towards the high of the next day, at 85.20, where another break could see scope for advances towards the peak of November 1st, at 86.05.
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