AUD/JPY - Bearish outside day, double top?
- AUD/JPY looks heavy after Friday's bearish outside day.
- Focus on BOJ and US government shutdown.
- Hawkish BOJ could yield double top completion.
AUD/JPY may have found a short-term top around 89.00 levels, suggests Friday's bearish outside day candle.
As of writing, the pair is slightly better bid at 88.55 levels but still trades well below Friday's high of 89.02. Also, a bearish follow-through today would boost the odds of pair sliding lower to 87.21 (Jan. 10 low & double top neckline).
That said, the next move in the AUD/JPY is heavily dependent on what the Bank of Japan (BOJ) says tomorrow. The consensus is that BOJ's Kuroda will likely remind investors that an exit from the ultra-easy monetary policy will be some time away. In such a scenario, the Yen may weaken somewhat, although the resulting upside in AUD/JPY would be very limited if US equities have turned risk-averse (in response to the government shutdown) by then.
Meanwhile, a sharp drop to 87.21 (double top neckline) cannot be ruled out if the BOJ drops hawkish hints and US equities drop.
AUD/JPY Technical Levels
A move above 88.63 (76.4% Fib R of 89.07-87.21) would expose resistance at 89.00 (zero levels) and 89.09 (Jan. 4 high). On the other hand, a violation at 88.378 (previous day's low) would expose 87.84 (Jan. 17 low) and 87.63 (Jan. 2 low).
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
