AUD/JPY Price Analysis: Bulls come up for air into the bear's lair
|- AUD/JPY bears are on the prowl as the price moves into daily resistance.
- A downside continuation is probable in the days ahead for a test of 79.50.
From a daily and weekly perspective, AUD/JPY is offering the bear's a free lunch or a discount at the minimum.
The following is a top-down analysis that illustrates the opportunity on the table from deep within the bear's lair.
First, for some background, the price has followed precisely the following analysis from the 15 July and the start of the weeks follow up in the following articles
- 15 July AUD/JPY Price Analysis: Bears in control, eye daily extension,
- 18 July COVID spread weighing on market's risk appetite
Prior AUD/JPY technical analysis, 18 July
As per the prior analysis, AUD/JPY Price Analysis: Bears in control, eye daily extension, the cross is back under pressure and heading towards weekly support structure as per technical analysis below.
Prior analysis, AUD/JPY daily chart, 15 July
The price is in a bearish trend and given the recent correction that has started to run out of momentum, there are prospects of a continuation to the downside.
Prior market update, 18 July
The above chart illustrates the progress made since the original article on the 15 July.
Bears will eye between the 80.90 and 80.50 weekly target area at this juncture following the prior week's bearish weekly close.
Live market update, 22 July Asia session
As shown, the weekly downside target area was breached this week and the current wick is compelling as it represents a correction on the lower time frames.
It is early days yet, but presuming that the week will close bearishly with a lower weekly close, the prospects of a bearish continuation will be even higher.
Meanwhile, zooming out to the monthly time frame and applying volume profile analysis, the price is well below the Point of Control dating all the way back to 2005.
In more recent annual ranges, the Point of Control since the summer of 2017 is located at 82.00 the figure.
While there are probabilities that the price will retest the level in due course, the current trajectory and momentum are with the bears for the time being.
In fact, the price has broken below the 38.2% Fibo.
The market would, therefore, be expected to continue to test the 50% mean reversion and the confluence of prior structure, if not continue all the way to the old resistance and confluence of the 61.8% Fibo. These levels are located at 79.50 and 78.00 respectively.
Meanwhile, taking into consideration the weekly wick:
... and the daily chart's subsequent correction:
... there are prospects of a downside continuation to test the monthly confluence of the 50% mean reversion and the daily -272% target area near 79.50.
However, with that being said, there is still room to go in this correction to the upside until a 50% mean reversion of the current daily bearish impulse at 81.3320.
In any case, bears will be looking for upside deceleration and bearish structure from within this correction to position for a downside continuation in the coming sessions.
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