AUD/JPY meets with tough resistance at 76.55 - Rabobank

FXStreet notes that AUD/JPY has rebounded from the 59.905 March low and now faces tough resistance at 76.55 as the pair maintains an upside bias while above 73. What’s more, Piotr Matys from Rabobank highlights the possible formation of an inverted head & shoulders pattern.

“A sharp rebound from the March low at 59.905 has run into solid resistance formed by previous highs around 76.55. This must be cleared to improve the mid-term outlook for AUD/JPY.” 

“The support area around 73 must hold to keep the short-term upside bias intact. A break lower would indicate that the bears are taking advantage, although this could be short-lived and in fact a pullback could prove a bullish mid-term signal as explained below.” 

“The price action since 2019 implies that an inverted head & shoulders chart pattern could be in the making. The right shoulder is still missing, but it could form if risk aversion escalates in the coming months and AUD/JPY falls to around or lower than the 2019 low at 69.967.” 

“A pullback in AUD/JPY in Q3/Q4 could be a bullish mid-term signal given that an inverted head & shoulders implies that the downside trend is likely to be reversed. If this bullish reversal pattern does form in the coming months and AUD/JPY breaks above the neckline, it would be a major constructive signal for AUD.”