AUD/JPY Price Analysis: Hovers around 94.60s as a rising wedge and a bearish engulfing pattern loom

• The AUD/JPY remains positive in the week, so far up 1.34%.
• On Thursday, the AUD/JPY plunged more than 100-pips, spurred by a technical formation.
• AUD/JPY Price Forecast: Two bearish signals might exacerbate a correction in the AUD/JPY.

The Australian dollar posts modest gains despite two bearish technical analysis patterns, which threaten to lower the AUD/JPY prices as the Asian Pacific session begins. The AUD/JPY is trading at 94.68 and has gained some 0.09% at the time of writing.

US equities ended the session with losses, as Fed Chief Jerome Powell “scared” investors when he said that 50-bps rate increases are “on the table” for the May meeting. Meanwhile, Asian equity futures point to a lower open, carrying on Wall Street sentiment and weighing on risk-sensitive currencies, like the AUD, as investors scramble towards safe-haven peers.

On Thursday, the AUD/JPY began the Asian session on the right foot near the daily high, which was 95.58. However, late in the Asian session, the AUD/JPY formed a bearish engulfing candle in the 1-hour chart, that began the 100-pip plunge, from 95.58 to 94.40, late in the North American session.

AUD/JPY Price Forecast: Technical outlook

The AUD/JPY is upward biased, but price action in the last month formed a rising wedge with bearish implications, alongside a bearish engulfing candle pattern. Fuerhtmore, the Relative Strength Index (RSI), although at overbought territory at 70.77, aims lower, a signal that could exacerbate a move downwards.

Therefore, the AUD/JPY outlook is tilted to the downside in the short term. The pair’s first support would be March’s 28 daily high at 94.32. Once cleared, the next support would be April’s 13 daily high at 93.86, followed by  April’s 5 daily low at 92.27.

Key Technical Levels