AUD/JPY traded higher on Monday, but hit resistance slightly below 74.82 today, and then, it retreated somewhat. Although the prevailing short-term path appears to be positive, we prefer to wait for a break above 74.82, which is the peak of last Tuesday, before we start examining whether the prior uptrend has resumed. For now, we would stay sidelined.
If indeed the bulls prove to be strong enough to overcome the 74.82 zone, we may then see them pushing towards the 75.20 area, which is marked as a resistance by the peak of July 30th. Another break, above 75.20 could extend the advance towards the high of July 26th, at around 75.60.
Taking a look at our short-term oscillators, we see that the RSI hit resistance near 70 and turned down (though it ticked up again today), while the MACD stands above both its zero and trigger lines, but points sideways. These indicators suggest slowing upside speed and thus, we would stay careful of a possible short-term setback before the next positive leg.
That said, we would like to see a clear dip below 73.95 before we start examining the bearish case. Such a move would confirm a forthcoming lower low on the 4-hour chart and may initially allow declines towards 73.65, which is near the inside swing high of October 15th. If the bears are not willing to stop there and manage to break that hurdle, this could carry larger bearish implications, perhaps paving the way towards 73.05, a zone which provided strong support between October 14th and 16th.
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