AUD/JPY traded higher last week, and specifically on Thursday, during the Asian session, it emerged above the 82.45 barrier, marked by the peak of December 16th, thereby confirming a forthcoming higher high. Then, it switched to consolidation mode. Overall, the rate is trading above the upside support line drawn from the low of December 3rd, as well as above the prior downside line taken from the high of November 4th. In our view, all these technical indications paint a positive picture.
We believe that the bulls may recharge again soon and perhaps aim for the 83.25 zone, which provided resistance between November 22nd and 25th. A break higher could pave the way towards the 84.15 or 84.50 barriers, marked by the high of November 16th and the inside swing low of November 2nd, respectively. If neither barrier is able to stop the advance, then we could see the bulls climbing towards the 85.20 territory, defined as a resistance by the high of November 4th.
Taking a look at our short-term oscillators, we see that the RSI fell back below its 70 line, and then, it flattened somewhat, while the MACD, although positive, stays below its trigger line, pointing down. Both indicators detect slowing upside speed and suggest that some further consolidation, or even a small retreat, may be in the works before the next leg north.
On the downside, we would like to see a clear dip below 81.27 before we start examining whether the bears have stolen the bulls’ swords. This could confirm a break below the upside line taken from the low of December 3rd, and may allow declines towards the 80.35 area, near the low of December 20th, or the 79.84 zone, marked by the low of December 7th. If the bears are willing to continue marching south, then we may see extensions towards the low of December 3rd, at 78.80.
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