• +297 pips of rebound seen in AUD/JPY from 3 October 2023 low of 93.06 has reached a key short-term resistance zone of 95.70/96.00.
• The up move from 10 October to 12 October 2023 has been accompanied by a weakening of upside momentum as indicated by the hourly RSI.
• Watch the near-term support at 95.30 (20-day moving average) as a potential downside trigger level.

This is a follow-up analysis of our prior report, “Bearish reaction from key long-term range resistance in place since Oct 2007” published on 3 October 2023. Click here for a recap.

The price actions of the AUD/JPY cross-pair have shaped the expected slide and hit the 93.70 support as it printed an intraday low of 93.06 on 3 October 2023 in light of the unconfirmed Bank of Japan (BoJ) intervention in the foreign exchange market as instructed by Japan’s Ministry of Finance to negate the persistent multi-month JPY weakness in place since the start of 2023.

The recent bullish tone has started to lose upside momentum

Fig 1: AUD/JPY minor short-term trend as of 12 Oct 2023 (Source: TradingView, click to enlarge chart)

In the past two weeks, the AUD/JPY has rallied by +276 pips from its 3 October low to its recent 12 October high of 95.83 but its upside momentum has started to abate at the key short-term resistance zone of 95.70/96.00.

The current price actions have almost retested the former minor ascending support from the 8 September 2023 low and have traded in a tight range of 26 pips since the start of today, 12 October Asian session.

In addition, the hourly RSI indicator, a gauge of momentum has flashed a bearish divergence condition at its overbought region which highlights the lack of upside momentum follow-through since 10 October 2023. These observations suggest an increased risk of a short-term bearish reversal in AUD/JPY at this juncture.

Watch the 96.00 key short-term pivotal resistance (also the minor congestion area of 29 September/2 October 2023 & the 76.4% Fibonacci retracement of the recent slide from 29 September 2023 high to 3 October 2023 low) and a break below the near-term support of 95.30 (also the 20-day moving average) reinforces the bearish reversal scenario towards the next intermediate support at 94.60 in the first step.

However, a clearance above 96.00 invalidates the bearish reversal scenario for a squeeze up to a retest on the long-term secular resistance of 96.60/96.88.

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