AUD/JPY Signs of Weakness Becoming More Obvious

AUD/JPY Signs of Weakness Becoming More Obvious

Published: September 16th, 2020

Weekly chart

AUD/JPY Weekly Technical Analysis 16 Sep 2020

Starting off with the weekly chart we can get the big picture. First off, AUD/JPY is clearly trending down in the long term. The most recent rejection of the downtrend trendline proves the validity of the downtrend and increasing the probability of further price decline.

Based on the Fibonacci retracement indicator applied to the previous upside correction, we can see that 78.6% Fibs at 75.66 could be the nearest support level to watch. Back in June 2016 this level already played a role of the support and this could be the case once again. In the following charts, we’ll talk more about the importance of this level, which will be proved multiple times.

Daily chart

AUD/JPY Daily Technical Analysis 16 Sep 2020

On the daily chart, the price has reached and cleanly rejected the 427.2% Fibonacci retracement level at 78.48 on August 31. Fibs were applied to the corrective move down after price broke above the 200 Exponential Moving Average.

Besides, after rejecting the resistance, AUD/JPY with confidence broke and closed below the average price uptrend trendline, and along with the bounce off the resistance, it might imply further price weakness.

16-Hour chart

AUD/JPY 16-Hour Technical Analysis 16 Sep 2020

On the 16-hour chart, the Fibonacci retracement indicator was applied to the last move to the upside. It shows two important levels, first being the 23.6% retracement at 77.61, which acted as a strong resistance thought the past week and has been rejected multiple times. The second is the 78.6% Fibs support, which corresponds with yet another 78.6% Fibs as per the weekly chart.

The recent price action shows that AUD/JPY broke below the uptrend trendline as well as 50 Exponential Moving Average. Clearly this indicates the price weakness, which holds a higher probability in relation to the uptrend continuation.

4-Hour chart

AUD/JPY 4-Hour Technical Analysis 16 Sep 2020

After rejecting the 23.6% Fibonacci resistance and 50 EMA, the price broke below the ascending channel. Then, as can be seen on the chart, the price re-tested and even attempted to break above the 77.61 resistance level. Nonetheless, AUD/JPY failed to go any higher and close above the resistance, showing how strongly bears are defending this price area.

The Fibonacci retracement indicator was applied to previous downside correction, which shows that 38.2% Fibs corresponds exactly to the previously shown key support level at 75.63, Therefore, there is a strong probability that this will be the most important support level in the coming days and this potentially this week.

1-Hour chart

AUD/JPY 1-Hour Technical Analysis 16 Sep 2020

On the hourly chart the alternative price development is presented, where a correctional move up could take place prior to the AUD/JPY downtrend continuation. Certainly, AUD/JPY might attempt to re-test the previous resistance area as well as the downtrend trendline, and this could provide the best opportunity for sellers, but only if the downtrend trendline will be rejected.

Finally, Fibonacci retracement indicator was applied to the past correctional move to the upside, which quite precisely corresponds to the expected downside target at 75.63, which makes it an extremely important level to watch if the downtrend will take place.

Summary

AUD/JPY weakens is expected to continue as the price has rejected the resistance multiple times. Lower lows and lower highs are starting to appear on a lower timeframe, which should send price lower by nearly 100 pips this or next week.

Downside targets

As per the Weekly, 16-hour, 4-hour, and 1-hour charts, there is one main key support area near 75.63. It is confirmed by 4 different Fibonacci retracement levels and should act as a magnet for the price.

Probability of an uptrend

As per the 16-hour chat, the only way AUD/JPY will continue trending up is upon the daily break and close above the 77.73 level. In this case, the bearish scenario will get immediately invalidated and long term uptrend could become the reality.

Support: 75.66, 76.11

Resistance: 76.89, 77.73, 78.48

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