AUD/JPY opened with a positive gap on Monday, and during the Asian morning it managed to move back above the tentative downside resistance line drawn from the high of August 31st. At the time of writing, the rate is flirting with the 75.45 barrier, which provided resistance on November 4th and 5th, where a break would confirm a forthcoming higher high and turn the short-term outlook to the upside.
If this is the case, we would expect the rate to drift towards the 75.95 zone, marked by the peak of October 13th, the break of which may extend the rally towards the peak of October 9th, at around 76.50. The bulls may decide to take a small break after testing that zone, thereby allowing the rate to correct lower. However, as long as it would stay above the short-term upside support line drawn from the low of November 2nd, we would see decent chances for another leg of buying. If this time, this leg drives the pair above 76.50, we may see a test near the 76.85 area, marked by the high of September 18th.
Shifting attention to our short-term oscillators, we see that the RSI lies above 50 and points up, while the MACD, although below its trigger line, lies within its positive territory and points up as well. Both indicators detect accelerating upside speed and support the notion for further advances in this exchange rate.
On the downside, we would like to see a drop below 74.90 before we abandon the bullish case. Such a move may take the rate below both the aforementioned diagonal lines and may initially target the low of November 5th, at 74.55. Another break, below 74.55, could extend the slide towards the low of the day before, at around 74.05.
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