AUD/JPY traded lower on Tuesday, breaking below the upside support line drawn from the low of May 12th. Combined with the fact that the rate is also trading below a downside line taken from the high of June 9th, this increases the chances for further declines, but we prefer to wait for a dip below 92.23 before we get more confident on that front.
This could encourage the bears to push the action towards the 91.20 zone, defined as a support by the inside swing high of May 18th, or the 90.67 barrier, marked by the inside swing high of May 26th. If neither hurdle is able to halt the slide, then a break lower could extend the fall towards the low of May 26th, at 89.65. Another break, below 89.65, could allow the bears to test the 89.00 zone, marked by the low of May 19th.
Shifting attention to our short-term oscillators, we see that the RSI turned down and crossed again below its 30 line, while the MACD lies below both its zero and trigger lines. Both indicators detect strong downside speed and support the notion for further declines in this risk-linked exchange rate, but as we already mentioned, we would prefer to wait for a break below 92.23.
On the upside, we would like to see a clear break above 94.30 before we start examining whether the bulls have gained full control again. This will take the rate back above both the aforementioned diagonal lines and may allow advances towards the high of June 10th, at around 95.55. If the bulls are not willing to stop there, then we may see them extending their jump towards the peak of June 8th, at 96.85.
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