The AUDJPY has been marching higher over the last 5 or so trading days. However, that move higher was slowed today when the price failed on a break to new 10+month highs (highest level since early May 2011). This led to a pretty good move lower, helped by a break of trendline support on the 5 minute chart below. The 78 pip correction was the largest corrective move over the last week of trading.
However, as might be expected, the profit taking shorts from above, and dip buyers returned against the trendline support (see chart above) at the 87.81 level (low reached 87.84), and the price has rebounded higher. The 100 hour MA (blue line in the chart above) currently at the 87.78 level, was also a reason for intraday traders to buy on the dip. Risk was defined. Risk was limited. So the short covering and dip buying ensued.
Now the question is does the failure from above, trump the bullish bias that has taken the price up from the low of 86.074 (on March 12th) to the high of 88.618 today? The burden of proof remains with the sellers to push the price down. Traders tried to sell it off today, but could not generate enough momentum to get through those important target support levels at the 87.78-84 area.
Now, the price has rebounded to the 61.8% of the sharp leg down today and the 200 bar MA on the 5 minute chart. Momentum has slowed against this level at 88.264 (see chart below). If the sellers are intent on trying to keep some downward pressure, those sellers need to enter now. If not, the bullish traders remain in charge, and a move toward topside trendline at the 88.42 level (see downward trendline below) will be eyed as the next target resistance level.
