AUD/JPY price analysis: building a bearish flag formation

AUD/JPY price analysis: mildly bearish. A break of support would confirm the pattern and should lead to further losses

AUD/JPY price analysis                                 

Market highlights from the last week

Tuesday 23 June: risk appetite held firm on Tuesday amid stronger than expected global PMI business confidence readings.

Wednesday 24 June: US national new coronavirus cases increased to near record highs and the US threatened fresh tariffs on EU exports.

Thursday 25 June: European and US equities posted net gains with sentiment boosted by a relaxation of US Volcker rules, although there was still underlying caution.

Friday 26 June: market concerns over US coronavirus trends increased further and risk appetite declined on Friday as cases in key southern states increased further.

Monday 29 June: risk appetite stabilised on Monday amid slightly less alarming coronavirus data from the US, although caution prevailed.

AUD/JPY price analysis

Let us have a look at the technical viewpoint: 

Monthly: traded to a multi-year low of 59.87 in March. We have seen a 28 per cent recovery from the base to the June high (76.79).

Weekly: we are trading between the previous swing high of 76.54 (week 23rd December) and previous swing low 69.96 (week 26th August).

Daily: mixed trading for the last twelve days. The RSI (relative strength index) is close to 50 highlighting that the cross is non-trending.

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Intraday four-hour: this has resulted in a symmetrical triangle pattern being noted on this timeframe. This could also be seen as a flag formation. A breakthrough trend of higher lows (72.94) and the measured move target is 70.82, close to the aforementioned weekly support.

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Outlook: mildly bearish. A break of support would confirm the pattern and should lead to further losses 

Possible trade setup: 

Action: Selling a break of 72.90

Stop: 73.40

Target: 70.85 and 70.00

Potential return on risk to first target:  R4.1 (reward 205 / risk 50)

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Australian Dollar / Japanese Yen
Daily change
91.907
Low: 91.583
High: 92.082
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