AUD/JPY Price Analysis: Bulls strengthen on a healthy test of VCP breakout to near 96.00

• A test of a VCP pattern displays the strength of the cross.
• Advancing 50-EMA at 95.00 adds to the upside filters.
• Aussie bulls will drive the asset towards 100.00 after a break above 98.58.

The AUD/JPY pair has attempted a rebound after slipping below the critical support of 96.00 in the Tokyo session. The pair has continued its three-day losing streak after dropping below Wednesday’s low at 95.98. On a broader note, the cross has witnessed an intense sell-off after failing to sustain above the critical hurdle of 98.00.

On a daily scale, a firmer rally after an upside break of the symmetrical triangle has exhausted and a downside move has been observed. A breakout of a volatility contraction pattern has to deliver various tests before joining the bulls’ party. These corrective tests decline where the smart money is allocated by institutional investors.

The asset has already corrected to a 20-period Exponential Moving Average (EMA) at 96.00 but may find reversal action sooner. Also, the 50-EMA at 95.00 is advancing, which adds to the upside filters.

Meanwhile, the Relative Strength Index (RSI (14) has shifted into the 40.00-60.00 but that doesn’t warrant a bearish reversal.

Should the asset break above Thursday’s high at 97.13, aussie bulls will drive the asset towards Tuesday’s high of 98.58. A breach of the latter will drive the cross to its ultimate target of 100.00.

On the contrary, a decisive drop below August 24 low at 94.20 will drag the asset towards August 15 low at 93.07, followed by July 11 low at 92.31.

AUD/JPY daily chart