Technical Analysis – AUDJPY’s gentle climb continues

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Technical Analysis – AUDJPY’s gentle climb continues

Feb 9, 2024 at 7:49 am GMT- Achilleas Georgolopoulos

AUDJPY trades higher, clears the 100-day SMA
A contracting triangle has been forming as AUDJPY volatility drops
Momentum indicators remain uninterested in current upmove

AUDJPY is enjoying its fourth consecutive green candle as JPY remains under pressure across the board. AUDJPY has managed to climb above the busy 96.16-96.70 area but has not tested the March 24, 2023 upward sloping trendline. Interestingly, a contracting triangle has been forming as a result of a series of lower highs and higher lows, and declining volatility.

In the meantime, the momentum indicators remain mostly on the sidelines. The Average Directional Movement Index (ADX) appears uninterested in the recent upleg as it continues to point to a trendless market. Similarly, the RSI is hovering around its 50-midpoint without showing an inclination for a stronger move. On the other side, the stochastic oscillator has managed to jump above its moving average. Should this move higher continue, it could be seen as a bullish signal.

Should the bulls remain confident, they could try to lead AUDJPY higher and break above the upper boundary of the contracting triangle. If successful and provided they manage to overcome the resistance set by the March 24, 2023 trendline, they could then have a go at the September 13, 2022 high at 98.50, and eventually be given the opportunity to lead AUDJPY above the 100 level for the first time since 2014.

On the other hand, AUDJPY bears are possibly keen to put a stop to the current upleg. They could initially try to push AUDJPY below the 96.16-96.70 area that is populated by January 23, 2007 high, and the 50- and 100-day simple moving averages (SMAs). A successful break below this region could open the door to a more sizeable downleg with the next likely support area coming at the lower boundary of the contracting triangle and the 200-day SMA at 95.16.

To sum up, AUDJPY bulls remain in control of the market, but they appear to lack the momentum for a stronger move higher.