AUD/JPY traded lower on Tuesday, after it hit resistance at 85.60, slightly below the short-term downtrend line taken from the peak of the 31st of January. However, the slide was stopped near 84.25 and then the rate continued in a sideways manner between that support and the resistance of 84.90. Bearing in mind that the rate continues to trade below the aforementioned downtrend line, and also below all three our moving averages, which point south, we believe that the short-term outlook remains negative.
Sellers may regain control soon and aim for another test near 84.25. If they prove strong enough to overcome that support hurdle, then we may see them targeting our next support of 83.75, defined by the low of the 22nd of June.
Shifting our attention to our short-term oscillators, we see that the RSI, although below 50, rebounded somewhat from near its upside support line. The MACD lies below both its zero and trigger lines, but shows signs of bottoming. These indicators suggest that a minor corrective bounce may be looming before the next negative leg.
Nonetheless, as long as such a rebound remains limited below 84.90, we see a decent likelihood for the bears to take charge again and drive the battle lower. We would like to see a clear move above that resistance and the short-term downtrend line taken from the peak of the 31st of January before we start examining the case for a near-term reversal. Such a break could initially pave the way for our next resistance zone of 85.60.
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Article written by Charalambos Pissouros, Senior Market Analyst for JFD Brokers
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