AUD/JPY 4H Chart 9:15AM EDT 7/31/2012
The AUD/JPY has been rallying sharply from the 89.50 area, now testing 82.45, which is a range resistance seen in the 4H chart. We can see that the market is slowing down here as the 4H RSI shows a bearish divergence.
The 1H RSI also shows an extended bearish divergence. Price action has anchored out of a rising trendline, only as a sign of slowing down, yet to show reversal. A break below the 81.70 pivot should represent topping and introduce a reversion-back-to-the-mean type of scenario.
The 1H RSI breaking below 40 would also be a sign that the bullish momentum is lost.
In this scenario, we are looking for a return toward the middle of a range. A 50% retracement of the latest upswing from range support to resistance targets the 81.00 handle. If you are conservative on the bearish outlook since the AUD/JPY was bullish before entering this range, the 200-Hour SMA at 81.25 could be a closer target in the very short-term.
AUD/JPY 1H Chart 9:17AM EDT 7/31/2012
Fan Yang CMT is a trader, educator and a Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.