AUD/JPY: triple bottom reversal

4 August, 2015

The Reserve Bank of Australia has inspired a rally in the Aussie by changing a phrase in its latest policy statement. The RBA merely stated the obvious by noting that the Australian dollar is adjusting to significant declines in key commodity prices. As my colleague Chris Tedder reported, this is a far cry from the bank’s comments at its last policy meeting which suggested that further depreciation in the Aussie seemed both likely and necessary. The RBA also delivered a more upbeat outlook on the Australian economy as it kept the cash rate unchanged at 2%. However it did note that monetary policy needs to remain accommodative.

While the RBA’s decision not to verbally assault the currency may not have a long lasting impact on the AUD/USD because of the growing speculation about a US Federal Reserve rate hike, the Aussie may nonetheless perform better against some of the weaker currencies such as the EUR, JPY and NZD.

Indeed, the AUD/JPY may have already formed a triple bottom reversal pattern around 89.35 which could see rates rally strongly over the coming weeks. This level had already offered strong support back in February and then did twice again in July. Although the AUD/JPY has yet to make a higher high in order to confirm the reversal, the bulls will be happy to see price holding comfortably above the psychologically-import level of 90.00 and also the break of resistance at 91.00. The latter may now turn into support upon a potential re-test.

The next resistance to watch on the AUD/JPY is around the 92.25-92.45 area. The prior consolidative range high meets the 38.2% Fibonacci retracement level there. It is likely that a cluster of stop buy orders are sitting above this area, which could now get triggered, leading to a continuation of the upward move towards the next bullish targets.

Beyond the aforementioned range is the 50-day moving average at 93.35 then a bearish trend line around 94.00, followed by the 61.8% Fibonacci level at 94.20 and then the 200-day average at 94.85. These levels will need to be watched carefully as the overall trend is still technically bearish. If price eventually breaks above these levels then a more significant rally could be underway.

Meanwhile a closing break back below the 91.00 support would call into question the above outlook. Indeed, this potentially bullish outlook will become completely invalid if the AUD/JPY goes on to break decisively below 89.35.


Source link  
Gold surges to major $1250 resistance as uncertainty prevails

Gold surged Thursday on a breakout of its previous consolidation to hit and slightly exceed major technical resistance at $1250, a level not seen since early November...

Gold remains vulnerable amid hawkish Fed, strong dollar, equity highs

Gold has climbed sharply since the beginning of the year as the US dollar has pulled back from its late-2016 highs and the US Federal Reserve has exercised characteristic restraint in raising interest rates further after the last rate hike in December...

Gold well-supported on safe-haven flows, lagging dollar

Increasing political and economic uncertainties under the new Trump Administration, coupled with a sliding US dollar since the beginning of the year, have led to a sharp rise in gold prices for more than a month...


Gold pressured as dollar and equities remain supported

As the US dollar found some new life on Thursday and US equity markets hovered right around their new all-time highs, gold extended its recent pullback well below the $1200 handle. Since late December, the price of gold had been in a sharp relief rally from its 10-month lows around $1125 support...

Crude oil maintains bullish trend

Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal...

Trump press conference fails to deter equity bulls

President-Elect Donald Trump spoke on Wednesday morning at his first formal press conference since the November elections, and the markets were all ears. Trump covered a lot of ground with multiple topics that included...


Gold ripe for potential relief rally

The charts tell a clear story of the unrelenting plunge in gold prices since early November. This steep dive has been the result of several related factors, all of which have the potential to extend well into the new year. These largely Trump-driven factors include...

Could EUR/USD finally break 1.05 on this FOMC day?

The market is demanding a rate rise and the Fed better deliver it today, for if it doesn’t the bank’s credibly will be severely damaged. There is really no excuse not to do so. Economic data has been improving, financial markets are calm...

Mixed Jobs Report Keeps High Fed Expectations Intact

As we noted the day before Friday’s US jobs report, only a significantly worse-than-expected reading for November would have likely made the Federal Reserve’s next interest rate decision more difficult...

  


Share: