AUDJPY has been confined within a narrow range in recent weeks, between 74.40 and 72.70. Yet, the bigger picture is still bullish as the pair remains above a three-month upside support line and the price structure still consists of higher peaks and higher troughs. What’s more, the 50-day simple moving average (SMA) looks ready to cross above the 200-day one, forming a so-called ‘golden cross’, which would be another positive sign.
Short-term oscillators don’t tell us much about the next directional wave. The RSI is near its neutral 50 level, and although the MACD is positive, it’s stuck below its red trigger line.
In case the bulls manage to pierce above 74.40, that could open the door for 75.60, which was the inside swing low on June 8. A break higher would shift the focus to the one-year peak of 76.80. Any move above would signal a resumption of the broader uptrend, leaving it up to 77.50 to halt any further upside moves.
On the downside, a violation of the upside support line could see the pair challenge the lower bound of its recent range at 72.70. A move beneath would turn the spotlight to the 200- and 50-day SMAs, at 72.13 and 71.65 respectively. A break lower from the 200- and 50-day averages could present a more serious challenge for the bulls, turning the attention to the 71.10 zone next.
In brief, despite the recent consolidation, the outlook remains positive unless the bears manage to drive the battle below the 200- and 50-day SMAs.