AUDJPY has shifted to a bullish bias in the short to medium-term timeframe after strong upside momentum in the prior weeks and recorded a one-month high at 86.10. The price rebounded on the 84.30 support barrier, which overlaps with the ascending trend line that is holding since September 27.
However, since Monday’s trading session, the pair is trading near the 50-day simple moving average as well as near the upper boundary of the Bollinger band and both are acting as significant resistance obstacles for the bears. Momentum faded over the last few days when market reached positive levels. The daily RSI crossed the 50 level to the upside but is moving with weaker momentum than before. In addition, the Rate of Change (ROC) indicator is sloping to the downside in the overbought zone indicating for a bearish correction.
The rally could slow down in case of a failed attempt to continue the bullish tendency above the aforementioned obstacles. The AUDJPY may approach the 38.2% Fibonacci retracement level (84.90) of the last big upward movement with low at 76.20 and high at 90.30.
An alternative scenario is a daily close above the immediate resistance at 86.65 and the 23.6% Fibonacci level (86.96) would help keep momentum to the upside but the tentative falling trend line needs to be broken to strengthen the move up to target the key 88.10 area soon.
