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Market Outlook
AUDJPY Reverse to the Upside?

AUDJPY Reverse to the Upside?

04-02-2022 09:22

AUDJPY Pair Rises Up, Test the Resistance Strength at 82.00 Level

Since the beginning of the year, the AUDJPY pair has tended to be bearish, even falling 3% or around 250 pips. However, since the end of January, the pair has been showing resistance, even being able to create new higher highs and higher lows which signal the end of the bearish trend. Now the AUDJPY rate looks like it will soon test the strength of the strong key level around 82.00. This is further strengthened by the statement of the Australian central bank which said that there was an economic scenario in which interest rates could rise later this year.

Quick Recap on AUD/JPY

AUDJPY looks ranging on higher timeframes with a bullish tendency, but what about on lower timeframes?

Let's dive in a little deeper to see how EURNZD fare on multiple timeframes:

AUD/JPY Monthly Technical Analysis

AUDJPY Reverse to the Upside?
Graph taken from TradingView.

On the monthly timeframe, AUDJPY looks choppy since Q3 2021. Prices only closed bullish and bearish alternating between 80.00 levels as support and 86.00 as main resistance. The price is still hovering around the MA 50, 100 and 200 which maintain it as dynamic support and resistance. There is no clear picture of the direction of AUDJPY on a monthly timeframe.

AUD/JPY Weekly Technical Analysis

AUDJPY Reverse to the Upside?
Graph taken from TradingView.

On a weekly basis, AUDJPY formed lower highs and higher lows. This week's candle seems to be closing bullish soon, ending the bearish candle's dominance for the previous 4 weeks. This week the price has exceeded the highest level of last week's candle. This provides additional confirmation of the possibility that prices will soar in the next week.

AUD/JPY Daily Technical Analysis

AUDJPY Reverse to the Upside?
Graph taken from TradingView.

On the daily timeframe, AUDJPY is approaching the nearest key level at 82,200. The January 31 candle that closed with a bullish engulfing mark marked the beginning of a reversal for AUDJPY to rise and start a bullish trend in the short term. Yesterday's daily candle closed strongly bullish above the MA50, marking the price has created a new daily support around 81,600.

Trading idea for AUD/JPY

AUDJPY Reverse to the Upside?
Graph taken from TradingView.

On H4, we can see more clearly that there is an attempt from AUDJPY to breakout from the key level of 82,000 which has been the support since mid-January. However, with the volume being quite good, we can anticipate the possibility of this pair going higher.

Order: Buy Stop
Entry: 82,300
Stop Loss: 81.850
Target 1: 82,800 (50% + BE)
Target 2: 83,600 (25%)
Target 3: 84,220 (25%)
Total Risk: Max 1% Equity (High Risk Setup)
Reason: The structure is bullish in the short term, impulse entry from the highest wick.

ZFX Analyst’s Predictions

The Reserve Bank of Australia provides fresh air about the possibility that the kangaroo country will soon increase its interest rates to reduce inflation, possibly in Q3 or Q4 this year. Of course this can bring appreciation to the value of the AUD.

On the other hand, the Japanese government is unlikely to raise interest rates any time soon given Japan's inflation tends to be 'under control' due to the delay in economic recovery from the coronavirus pandemic, and a public deflationary mindset in which households and firms act on the assumption that prices do not. will go up a lot.

The short-term bullish trend allows for an increase in AUDJPY if it is able to break above the key level of 82.00.

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Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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