November 29, 2018
The Australian Dollar (AUD) against the Japanese Yen (JPY) is an exciting pair for its relation to risk. The pair is frequently among one of the most highly correlated pairs to price action in US equities on a short to medium term basis. The pair has a propensity to rise in a low risk environment on carry flows while the opposite is true when we see a ‘risk-off’ approach in the markets.
From technical prospective we can observe that pair has given the clear confirmation of a bullish flag breakout on the daily chart. The bullish continuation pattern indicates the rally from the Oct. 26 low of 78.56 has resumed and may have opened the doors to 87.00.
The bull breakout on the AUD/JPY cross a global risk barometer could be hinting at “Santa rally” in global equities. At press time, the pair is reporting moderate losses at 82.83, possibly due to a weaker-than-expected Q3 CAPEX release. Recently pair has received the supply at 83 level which is indicates that 83 level can be a stumble block for bulls but very soon we have seen a big bullish marabuzo candlestick which is generating bullish signal as it has given us valid breakout of bullish flag pattern.
Well presently pair is trading above all the major and minor EMA lines and sustaining above 200SMA line. However, we have seen some correction in the pair after making the high of 83 level which was second opportunity to buy again. but now it seems that pair is approaching the 85 level in near term. A daily closing above the previous swing’s high i.e. 85 level will open the way towards the 87 level in near term.
If other thing remains constant, it is likely that the Australian Dollar continues to gain against the Japanese Yen during the following trading sessions. The next targets for the pair could be the 85 level. Odds are in favor of bulls and intraday bias remains bullish on the pair. A bullish crossover on MACD indicator is favoring the bulls and providing us bullish signal for the time being and RSI is also providing bullish signal. The 85 level is immediate resistance level followed by 87 whereas 82 level is strong key support level followed by 80 level.