AUD/JPY Price Analysis: Medium-and-near term tilted to the downside

• The Australian dollar extended to three days in a row loss amid mild risk-on market sentiment.
• AUD/JPY daily and hourly charts are tilted to the downside.

The AUD/JPY slides for the second consecutive day, though recovered some Friday’s losses, trading at 81.07 as the New York session wanes at the time of writing. On Monday, the market sentiment slightly improved. However, as the Asian Pacific session began, equity futures in Asia are tilted to the upside, except for the Chinese Hang-Seng, retreating almost 1.40%.

In the overnight session, the AUD/JPY pair traded within a 70-pip range, with no clear direction, meandering around the Monday central daily pivot. It is trading just above the central daily pivot at press time, despite the daily chart depicting a bullish flag.

AUD/JPY Price Forecast: Technical outlook

Daily chart

On Friday, the AUD/JPY pair dripped 200 pips, from 82.85 towards 80.79, breaking on its way down, crucial support levels, like the 50, 100, and the 200-day moving averages (DMA’s). That is due to the COVID-19 omicron variant, as countries closed borders, banning flights from South Africa and African countries. On Friday, the pair broke beneath the abovementioned, but as the Asian session began, the AUD/JPY opened within the bullish flag pattern on Monday The Relative Strength Index (RSI) is at 33, aims slightly flat, but as it remains below the 50-midline, the AUD/JPY has a downward bias.

In the outcome of continuing lower, the first support would be the bottom of the bullish flag around the 80.50-75 range. A breach of that level and the bullish flag would expose the November 26 low at 80.46, followed by the October 1 swing low at 79.89.

1-hour chart

On this chart, the AUD/JPY has a downward bias confirmed by the hourly simple moving averages (HSMA) residing above the spot price. Further, as the price action consolidates in a 70-pip range, an ascending wedge is forming, indicating that the pair might trade to the downside in the near term, thus negating the bullish flag pattern formed in the daily chart.

In the outcome of breaking to the downside, the first support would be the S1 daily pivot at 80.67. A breach of the latter would expose the November 26 low at 80.47, followed by the S2 daily pivot at 80.27.