Strengths of AUD / JPY:
- AUD / JPY at the top of the long-term downward channel
- Short term to a large place with an almost broken rising wedge
AUD/JPY had a nice lift hold not so long ago, a pattern highlighted as giving the pair breakout potential. The trend was upward given the pattern, and that we got, but there was also a question of how much this breakout could be supported by long term resistance.
So far, these concerns are being validated as the coin has broken and the price has pulled back towards the lower trendline of the coin. This is an important point because if the support can hold, so can the upward bias in favor of another attempt to break the long term downtrend line.
But if the bottom side of the model breaks, the downward movement could be even more powerful than an upward movement. First, you have this long term resistance in a downward channel that suggests the long term trend is down. Second, failure of pattern breaks can lead to a mass exodus with the crowd leaning the wrong way during the congestion phase that created the pattern in the first place.
Support is support until it’s discontinued, and we haven’t seen that happen yet. Using yesterday’s low of 76.11 as a level to watch. Staying above and a higher push could guarantee, however, if it breaks then we should see the AUD / JPY start to accelerate lower as the long side of the market finds its way to its background, with 72 , 52 (bottom corner) as the first big target.
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AUD / JPY weekly chart (large resistance line)
4-hour AUD / JPY chart (keep an eye on the lower corner line)
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— Written by Paul Robinson, Market Analyst
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