AUD/JPY Price Analysis: Bulls reclaim 90.50 as they prepare an assault towards 91.00

• The AUD/JPY extended its gains for the third straight day, courtesy of a buoyant market mood.
• Improvement in the Covid-19 situation in China shifted sentiment positively, as reflected by global equities rallying.
• AUD/JPY Price Forecast: Neutral-upwards in both time-frames, though a bearish flag in the hourly chart could send the pair sliding towards 90.00.

The AUD/JPY advances as the North American session winds down, gaining 1.01%, courtesy of a positive market mood. Reports from China say that Shanghai has not reported Covid-19 cases for the third straight day, as the deputy major Zong Ming noted that Shanghai’s reopening would be carried out in stages. At the time of writing, the AUD/JPY is trading at 90.94.

Reflection of the above-mentioned is the behavior of US equities, finishing the session with gains. At the same time, Asian futures are pointing to a higher open, carrying on sentiment from Tuesday.

On Tuesday, the AUD/JPY opened around the 90.00 mark, and as China’s news crossed newswires, the risk barometer of the FX space rallied 120-pips, reaching a daily high at around 91.16, to finally retreat below the 91.00 threshold as the New York session came to an end.

AUD/JPY Price Forecast: Technical outlook

Daily chart

The AUD/JPY daily chart depicts the pair as neutral-upward biased, as the exchange rate is trapped between the 50 and the 100-day moving averages (DMAs), each at 91.19 and 86.97, respectively. MACD’s histogram shows that the distance between the MACD-line and the signal is reducing, suggesting that the former would crossover the latter, triggering a bullish signal that, if achieved, the cross-currency pair would face solid resistance at around 92.55-65.

Hourly chart

The AUD/JPY is also neutral-upward biased in this time frame, but it is close to the 200-hour simple moving average (SMA) at around 90.47. It is worth noting that the pair is moving within the boundaries of an ascending channel, meaning that a bearish flag is forming, suggesting the AUD/JPY might resume the previous downtrend unless it breaks above the top-trendline of the channel.

Upwards, the AUD/JPY first resistance would be the R1 daily pivot at 91.45. Break above would expose the confluence of the R2 pivot point and April 27, 2020, daily high at 91.98, followed by a downslope trendline, around 92.50-65.

On the other hand, the AUD/JPY first support would be the daily pivot point at around 90.66. Break below would expose the 200-hour SMA at 90.47, followed by the confluence of the 100-hour SMA and the S1 daily pivot at 90.07.