This Aussie pair recently busted through its long-term channel resistance, suggesting a reversal from the downtrend.
Are more buyers about to hop in this potential retest?
Take a look at these correction levels on the 4-hour time frame:
AUD/JPY 4-hour Forex Chart by TradingView
Economic data from the Land Down Under has mostly been impressive recently, as the CPI and GDP readings suggested lower odds of further easing from the Reserve Bank of Australia (RBA).
At the same time, the pickup in risk-taking stemming from Fed interest rate cut expectations lifted the higher-yielding commodity currency while weighing on the safe-haven yen.
Can AUD/JPY sustain its uptrend after this pullback?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Australian dollar and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
AUD/JPY is retreating from R1 (98.21) and closing in on the 38.2% Fibonacci retracement level near S1 (97.07) and a major psychological level, which could be enough to hold as a floor.
A larger correction could reach the 50% level and 200 SMA dynamic support closer to the broken channel resistance and the 96.50 minor psychological mark while the line in the sand for a bullish pullback is likely the 61.8% Fib at S3 (95.92).
Keep your eyes peeled for reversal candlesticks at these levels since a continuation of the climb could take AUD/JPY back up to the swing high or fresh upside targets at R2 (98.78) and beyond.
Just stay on the lookout for long bearish candles closing below the channel top since these could suggest that the downtrend is ready to resume, possibly dragging AUD/JPY to downside targets at S4 (95.26) or the channel bottom near S5 (94.60) next.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
