The AUD/JPY pair is consolidating around its critical support of 90.43 printed in the last week of April. The cross is falling sharply after printing a high of 94.03 last week. Failing to kiss the round level resistance of 95.00 triggered the Japanese bulls, which dragged the asset lower firmly.
The formation of a Head and Shoulder chart pattern on a four-hour scale has activated a broader weakness in the pair. Usually, the formation of the above-mentioned chart pattern signals a prolonged inventory distribution in which institutional investors shift their inventories to the retail participants.
A bear cross, represented by the 20- and 50-period Exponential Moving Averages (EMAs) at 92.60 adds to the downside filters.
Also, the momentum oscillator, Relative Strength Index (RSI) (14) has shifted from a consolidation range of 40.00-60.00 to a bearish range of 20.00-40.00, which indicates a fresh bearish impulsive wave going forward.
A decisive drop of the asset below the April 26 low at 90.45 will drag the cross towards April 22 low at 88.40, followed by March 11 high at 85.89.
On the flip side, aussie bulls could regain strength if the asset oversteps previous week’s high at 94.03. The occurrence of the same will send the cross towards April’s high and round level resistance at 95.75 and 97.00 respectively.
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