AUD/JPY Trading Close to Key Support Cluster

Bearish-Ranging Market: Since our latest update, the AUD/JPY has been sliding (failing to complete an inverted head and shoulder). The Aussie has been sliding along with other majors against the USD and JPY in late Oct-November in a period of risk-aversion. The AUD/JPY is still trading under the 200 day simple moving average. The RSI failed to push above 70, so the market is bearish to sideways. It is not completely bearish due to the ability of the market to push above the September high of 82.80 (although immediate rejected).

Support Cluster: Currently we are trading just under 78.00, which is near 50% retracement of the 72.03-83.95 swing. Below this we are going to test an even more significant support at 76.58. This is 1)61.8% retracement 2) retest of broken resistance trendline as support. 3) previous pivot established August 9. 4) could also be a wedge support seen in the 4H chart.

Wedge: The 4H chart shows the market in a 5-wave declining wedge. We are in the 5th wave, which does not look like a complete impulse wave: remember an impulse wave cannot have the 3rd wave being the shortest, and that would be the case right now if that last wave is completed. Therefore, we can expect some further extension of the decline before full completion of the wedge.

The wedge is complete if the market can then bounce back above the wedge resistance. The first target on the rally would be the origin of the latest wave down near 79.60. Above that and the 80.00 handle, we can discuss further bullish outlook, especially if a throwback respects support at or above 79.00.