AUD/JPY hits a major resistance area ahead of the first-tier data!
Will we see a breakthrough today? Or will the consolidation pattern continue for another day?
Let’s take a look at the 1 hour AUD/JPY chart for clues!
AUD/JPY for one hour Planned by TV
I don’t know if you noticed that the bears in the AUD/JPY currency pair managed to limit the upside of the AUD/JPY pair by defending the area of 91.00 – 92.25.
In fact, AUD/JPY is now hitting trend line resistance, which is below the R1 level (91.37) of today’s standard pivot points.
It also helps the Aussie sellers that the stochastic is hanging around “overbought” levels.
Is AUD/JPY ready to break trend line resistance? Or will the symmetrical triangle pattern continue this week?
We have two potential catalysts to consider.
For one thing, China dumps a bunch of producer and consumer data in just a few hours. Markets are currently expecting stronger driving reports from the world’s second largest economy, but negative surprises could have a bigger (downward) impact on “risky” assets such as the Australian dollar.
Global growth concerns also extend to the US with debt ceiling talks, retail sales reports, and a host of Fed speakers scheduled between now and Australian jobs data.
Reports of weaker economic growth in the US or an increase in Fed tightening could dampen risk appetite and push AUD/JPY lower.
Finally, the RBA will print its meeting minutes before we see jobs data in Australia. If the central bank turns out to be more hawkish than the markets actually expect, the Australian dollar could gain support and break through the AUD/JPY resistance even before the report is released.
For now, I am keeping close tabs on how AUD/JPY interacts with its resistance area.
Average daily volatility for the Australian dollar / Japanese yen pair It places the possible daily high around the previous week’s high (91.80) and the daily low at the 90.50 Pivot Point line.
Downside surprises from the data dump in China could keep the triangle pattern intact and pull AUD/JPY to 90.50 if not 90.25 region.
But if the risk friendly trading environment extends into the next trading sessions, I would also be ready to trade the potential break-up and trade retest of the previous highs of 91.80 or 92.50.
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