AUD/JPY formed a price top at the beginning of September after finding resistance at 98.67. Since then, it fell below a rising trend line that originated from August's low of 93.92. This essentially suggests consolidation/bearish correction against the August rally.
We also had price pull back up to test the price top which held. Therefore, we now have a slightly bearish bias in the short-term, but still within the context of a bullish market in the medium-term.
It should also be noted that we just saw a decent AUS jobs data for August, but after some brief bullish reaction, the AUD fell across the board. We need to respect this bearish outlook at least in the short-term since good data was not able to give the Aussie support.
(AUD/JPY 4H Chart 9/12)
Where might we expect this bearish correction to meet buyers? Well, the most conservative bearish outlook would be the 38.2% retracement at 96.86 up to to 97.00. An ABC correction with A=C targets 97.00.
The next support will be around 96.30, 50% retracement up to 96.40, 200-period SMA in the 4H chart.
Finally, an aggressive bearish correction should be limited to 95.74, 61.8% retracement. A break below 95.70 might put the bullish outlook in trouble.
When we look at the daily chart, we should gain confidence for the bullish outlook. We should also have more reason to believe that there will be buyers around the 50% retracement level of 96.30 up to 96.50, which was the resistance of a multi-month consolidation. This resistance was broken and might be tested as support.
We also see that if price falls below the 61.8% retracement and extends lower below 95.50, the bullish outlook might have to be shelved for a sideways if not bearish market.
(AUD/JPY Daily Chart 9/12)
Fan Yang is also the Chief Technical Strategist at forexminute.com.