Is it time for a recovery in AUD/JPY?

AUD/JPY traded yesterday and today during the Asian and EU sessions. The recovery started after the pair hit support at 80.15, allowing us to draw an upside support line from the low of July 20^th. Although AUD/JPY continues to trade below the downside resistance line taken from the high of May 10^th, the fact that we now have a higher low suggests that the bulls may be willing to stay in the game for a while longer.

A clear break above 81.50, which provided resistance between July 22^nd and 27^th, could confirm the case of a larger recovery and may initially target the high of July 16^th, at 81.95. A break above that level could carry larger bullish implications, perhaps paving the way towards the 82.78 zone, defined as a resistance by the high of July 13^th and the inside swing low of June 30^th, the break of which could see scope for extensions towards the 83.28 level, or the downside line taken from the high of May 10^th.

Our short-term oscillators detect positive price momentum and support the notion for further advances. The RSI lies above 50 and points up, while the MACD runs above both its zero and trigger lines, pointing up as well.

Now, in order to start examining whether the bears have regained control, we would like to see a dip below 79.85, the low of July 20^th. This will confirm the dip below the recently drawn upside line, and would take the rate into territories last tested back in February. We will then aim for the low of January 28^th, at 79.20, or the low of January 4^th, at 78.84, where another break could target the low of December 28^th, near 78.45.