After the rejection of the horizontal resistance level at 88.971, AUD/JPY pairs sharply fell in the global market breaking some major support level. The bulls finally regained their strength after hitting the major support level at 78.741. Most of the professional price action traders have already gone long in the AUD/JPY pair with the formation of the bullish engulfing pattern right at the horizontal support level. On the contrary, the conservative traders are currency waiting for minor bearish retracement of the price towards the broken tramline at 81.53.
Any bullish price action confirmation signal will be an excellent opportunity to execute fresh long orders with initial profit taking target set to 100 SMA. The 100 weekly SMA is going to provide an extreme level of selling pressure to the AUD/JPY pairs since it also in lines with the 61.8% bearish retracement level drawn in the higher time frame. Though this level seems to be a perfect selling zone a bullish crossover of the 100 and 200 weekly SMA will weaken the bears in AUD/JPY pairs. To be precise the trade setup near the horizontal resistance level might become extremely complicated and unless we have a clear sign of the market direction, execution of any trade will be a premature act.
AUD/JPY technical chart analysis
Figure: AUD/JPY bulls surging towards the 100 SMA
From the above figure, you can clearly see the bulls are slowly taking control of this market after the break of the bearish trend line resistance. The first bullish target for this pair is the 100 SMA which lies at 84.45. This level is going to play a vital role since 200 SMA and horizontal resistance level also coincides with 100 SMA. According to leading analyst of the reputed Forex broker, the bears still have chances until it manages to break through the 100 SMA. So any bearish price action confirmation signal will also give selling opportunity to the new traders. A weekly closing of the price above the 100 SMA will eventually lead this pair towards the next major resistance level at 88.971. This level is going to provide a significant amount of selling pressure to the AUD/JPY pair. A clear break of the price above the high of 14th January 2018 will bump up the AUD/JPY bulls in the global market.
On the downside, we need to break below the trend line support level at 81.47 to establish fresh bearish momentum in the global market. A clear break of the critical support level at 81.47 will lead this pair towards the next major support level at 78.741. This level is going to provide a significant amount of bullish momentum to this pair and any bullish price action confirmation signal will be an excellent opportunity to execute long orders. However, a weekly closing of the price below the major support level at 78.41 will lead this pair towards the next support level at 72.48.
Fundamental factors
The recent performance of the Japanese economy is not up to the mark and the leading investors are expecting a sharp decline in the valuation of low Yielding Japanese Yen. On the contrary, the Aussie economy is showing a great sign of recovery over the past two months and the leading investors are expecting a strong bullish run in AUD/JPY pair prior to the closing of this month. Moreover, the ongoing global economic crisis is also creating massive confusion into the mind of long-term traders as trade balance data is facing an extreme level of adjustment. Considering the fundamental factors, the overall bias for the AUD/JPY pairs remains bullish and any bullish price action confirmation signal might give excellent long trade opportunity. However, the traders are advised to trade with an extreme level of caution as we have plenty of high impact news for the Aussie economy in the upcoming week.