AUDJPY Bulls in Control as Momentum Remains Stagnant

AUDJPY Bulls in Control as Momentum Remains Stagnant

AUDJPY has been experiencing an upward trend, with the Australian dollar strengthening against the Japanese yen. The pair has cleared the 100-day Simple Moving Average (SMA) and continues to trade higher. However, a contracting triangle pattern has emerged, indicating a period of consolidation and declining volatility. Momentum indicators suggest a lack of interest in the current upward movement.

AUDJPY has seen four consecutive green candles, indicating bullish momentum. The Japanese yen remains under pressure across the board, contributing to the pair’s upward movement. AUDJPY has managed to surpass the resistance zone between 96.16 and 96.70. However, it has not yet tested the upward sloping trendline from March 24, 2023. This trendline will be a significant level to watch as it could determine the future direction of the pair.

A contracting triangle pattern has emerged on the AUDJPY chart. This pattern is the result of a series of lower highs and higher lows, indicating a period of consolidation. Volatility has been decreasing, suggesting that traders are becoming less interested in the pair’s movement. The Average Directional Movement Index (ADX) confirms this trendless market, while the Relative Strength Index (RSI) hovers around its midpoint without indicating a stronger move. On the other hand, the stochastic oscillator has jumped above its moving average, potentially signaling a bullish move.

Possible Breakout Scenarios

If the bullish momentum continues, AUDJPY bulls may attempt to break above the upper boundary of the contracting triangle. A successful breakout, along with overcoming the resistance from the March 24, 2023 trendline, could lead to a test of the September 13, 2022 high at 98.50. Beyond that, bulls may have the opportunity to push AUDJPY above the significant psychological level of 100 for the first time since 2014.

While bulls remain in control, AUDJPY bears could potentially put a stop to the current upleg. Among their strategies is an initial push to break the support zone between 96.16 and 96.70. This zone is significant as it includes the January 23, 2007 high and the 50- and 100-day SMAs. A successful break below this support zone could open the door to a more significant downward movement. The next likely support area would be at the lower boundary of the contracting triangle and the 200-day SMA at 95.16.

AUDJPY bulls are currently in control of the market, but their momentum appears to be lacking. The pair’s upward movement has been supported by the weakening of the Japanese yen. However, the emergence of a contracting triangle and stagnant momentum indicators suggest a potential period of consolidation. Traders should closely monitor the breakout potential from the pattern, as it could determine the future direction of AUDJPY.

Technical Analysis

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