AUD/JPY plummeted to a new 21-month low of 79.97 earlier today, slipping below the trading range of 84.50 – 80.60 that had been holding since February 9. The bearish scenario is further supported by the deterioration of the technical indicators and the negative aligned moving averages in the daily timeframe.
Looking at momentum oscillators, further declines are expected in the near future despite the fact that the price is trying to pare the negative gap it posted today. The RSI is below its neutral 50 line, detecting negative momentum, and is also pointing downwards. The MACD, already negative, lies below its trigger and zero lines.
Should the pair manage to strengthen its negative momentum, the next support could come near the 61.8% Fibonacci retracement level of the up-leg from 72.41 to 90.29, around 79.97. Below this level, support to declines could come from the 78.70 level, taken from the highs in September 2016.
A move to the upside could see immediate resistance at the 80.60 hurdle, and should the market increase positive momentum above this area, the 50.0% Fibonacci of 81.33 could be the next level in focus. A stronger barrier though, could be found at the 38.2% Fibonacci of 83.45, but the price first needs to surpass the 20- and 40-day simple moving averages (SMA) at 82.14 and 82.35 respectively in the near-term.
Turning to the medium-term picture, the market seems to be in a bearish mode given that the price develops below the consolidation area and the moving averages, which seem ready to record a negative cross.
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