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Fan Yang

AUD/JPY Bounces off Key Support

We have been looking at heavy price action in AUD/JPY, which prompted me to anticipate a break towards the 80.00 handle. However, the market did respect the noted support, which we can see on the daily chart below.

AUD/JPY Daily Chart

(click to enlarge)

Bullish Divergence:
- Note that after price tested the rising trendline, there was a bullish divergence.
- The bullish divergence suggested that the market was slowing down here at the rising support. This hesitation of the bearish swing indicates a good chance bulls will fight back here, and the market did indeed rebound.
Resistance:
- Now, we should monitor the 85.50 area for resistance.
- We should also anticipate resistance when the 4H RSI approaches 60. 
- If the market is bullish, it should push above 85.50 and the RSI should push above 60.
- We would only anticipate resistance if we think there is a chance that the bearish correction is not over. In this scenario, price would likely swing back down from this 85-85.50 area. 

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