AUD/JPY - Corrective rally paused at key Fibonacci level
- AUD/JPY risks bearish doji reversal.
- China data has failed to put a bid under the Aussie dollar.
- Focus on stocks.
The AUD/JPY created a doji candle, signaling the corrective rally from the March 5 low of 81.49 has run out of steam around 84.38 (38.2 percent Fibonacci retracement of 89.07-81.49).
A negative follow-through today (preferably a close below previous day's low of 83.54) would confirm bearish doji reversal, meaning the corrective rally has ended and the bears have regained control.
The action in the related markets does indicate scope for a drop below 83.54. For instance, the S&P 500 futures are reporting 0.20 percent drop. Further, China may react strongly to talk of wider US tariffs, thus boosting fears of a full-blown trade war. So, the Japanese Yen will likely remain well bid. Also, the better-than-expected China industrial production data released a few minutes ago has not had a positive impact on the Aussie dollar.
That said, the pair may revisit 84.38 (38.2 percent Fibonacci retracement) and could possibly break higher if the equities put on a good show. Such a move would signal a short-term bearish-to-bullish trend change.
AUD/JPY Technical Levels
As of writing, the pair is trading at 84.83. A close above 84.38 (38.2% Fibonacci retracement) would open doors for a sustained rally to 85.60 (Feb. 13 high) and 85.84 (descending 50-day moving average). On the downside, a close below 83.32 could yield re-test of 82.50 (March 8 low) and 82.02 (March 7 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.
