Written :- Harish Shahi- Sr. Commodity & Forex Analyst
The Australian Dollar (AUD) against the Japanese Yen (JPY) is an exciting pair for its relation to risk. The pair is frequently among one of the most highly correlated pairs to price action in US equities on a short to medium term basis. The pair has a propensity to rise in a low risk environment on carry flows while the opposite is true when we see a ‘risk-off’ approach in the markets.
Earlier the pair has been moving between the descending trend channel lines since mid-July. The medium-term descending trend channel pattern guided the currency pair to November 16, 2016 low level at 78.77 a few days ago. However, after reaching its lowest level since 2016, the pair made a U-turn towards north side. As a result, the pair has breached both the 50 and 100 hourly simple moving averages. If other thing remains constant, it is likely that the Australian Dollar continues to gain strength against the Japanese Yen during the following trading sessions. The next targets for the pair could be the 200-hour SMA at 80.87.
Presently the pair is trading and sustaining above the major and minor EMA lines which is generating bullish signal for the time being. Two consecutive bullish marabuzo candlesticks are providing us bullish signal. Odds are in favor of bulls and intraday bias remains bullish on the pair. A bullish crossover on MACD indicator is favoring the bulls and providing us bullish signal for the time being and RSI is also providing trend reversal signal i.e. bullish signal . The 82.50 level is immediate resistance level followed by 83.90 whereas 80.10 level is strong key support level followed by 78.90 level.