AUD/JPY Testing Resolve of Broken Double Bottom

The 1H AUD/JPY chart shows a market that had double bottomed after rallying above the 81.53 resistance pivot. The 1H RSI kissed 70, reflecting bullish momentum, but the market has since fallen from 81.87. It is now at 38.2% retracement of the latest upswing. If the market is to confirm the bullish breakout from this double bottom, the bulls will have to show resolve by not allowing the market to fall below 81.06(61.8% retracement). Also, if the RSI fails to break below, the bullish momentum is still maintained.

The 4H chart shows that the market has been falling after a bull run became overbought and exhausted. After the first swing another could be anticipated. Therefore, if the 1H double bottom fails to hold, the bearish continuation in the short-term in context of a medium term rally is the outlook. This outlook has a swing projection that targets 79.56, where the rising trendline and 200 4H Simple Moving Average would reside.

Hold of the double bottom and a return above 81.87, while pushing the 4H RSI reading above 60, could open up the high near 82.82. If that is broken, and the market clears 83.00, you can see in the daily chart that this signals a bullish breakout from a declining trendline. The presence of this trendline actually builds the case for some further short-term bearish outlook, if it wasn’t for the bullish momentum established in the run up to test this trendline (RSI went above 70).