AUD/JPY has been stuck inside this consolidation pattern for a while, but a breakout looks imminent.
On the hourly chart below, you can see that the pair has formed higher lows since the beginning of the month and found resistance around 92.00 to form an ascending triangle.
Which way can you go through Australia’s monthly consumer price index launch?
AUD/JPY for one hour Planned by TV
The price recently bounced off the top of the triangle and is now diving again below the pivot point (91.57) to set its sights on a bottom near the 91.00 handle.
Stronger selling pressure could trigger a breakout below this support area and lead to a drop to the next potential floor at S1 (90.78).
A move below this area could be enough to confirm a descending triangle break, which could put AUD/JPY into a downtrend that is at least as high as the chart pattern.
That would be close to 300 points!
Technical indicators look mixed at the moment, with moving averages oscillating to reflect sideways price action and stochastic looking ready to rise from oversold territory.
With these mixed signals, Australian dollar traders can take cues from Australia’s upcoming inflation update instead.
Analysts expect a slight pick-up in price pressures, which could push the CPI reading on an annual basis from 6.3% to 6.4%. However, it should also be noted that the past three releases have been underestimated.
The ANZ Commodity Prices report also reflected a sharp decline in April due to lower energy prices while MI inflation slowed from 0.3% to 0.2% in the same month.
In this case, weaker-than-expected official CPI data could signal another bearish wave for AUD/JPY as this is likely to seal the deal for the RBA to pause tightening for a while longer.
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