EUR / JPY, AUD / JPY Levels to see

Japanese Yen Outlook, AUD / JPY, EUR / JPY, JPY Technical Analysis – Talking Points:

• Japanese Yen may extend its recent decline after hitting key trend support and slipping into oversold territory for the second time in 2020.
• EUR / JPY rates are to blame for a pullback as RSI divergence suggests exhaustion and price pushes a bearish Rising Wedge pattern.
• AUD / JPY tracking in Ascending Triangle hints at possible bullish breakout in the coming days.

Despite a relatively gloomy fundamental background, the port-associated Japanese Yen appears to be able to extend its 5-month decline against its major counterparts after its 6-year uptrend snapped and slipped into oversold territory for the second year in a row.

Japanese Yen Index ** Daily Chart

JPY index daily chart created with TradingView** Average JPY Index CAD / JPY, EUR / JPY, AUD / JPY, GBP / JPY

Directed lower by the downtrend that extended from the annual high set in March, JPY crashed through its uptrend of 2014 earlier this month before finding support at the low in February.

Although RSI divergence suggesting a degree of underlying exhaustion in the recent downtrend, the oscillator remains below 30 and in oversold territory. This may be a sign of further loss in the full term for the Japanese Yen.

With the February low, however, the downside for the moment is a corrective rally to test the March downtrend, likely in the coming days.

The development of the trend-defining 50-day moving average also hints at a potential correction, as it flattens out remarkably after crossing below its ‘slower’ 200-period of 200 periods.

However, the path of least resistance to the ‘safe haven’ currency appears to be lower, with a break and close to the February lows needed to validate bearish potential.

EUR / JPY Daily Chart – Rising Wedge Pattern Threatens Uptrend

Daily EUR / JPY Chart Made With TradingView

IN Hanging man candle just ashamed of the April 2019 high (126.80), combined with significant RSI divergence, could signal the end of the 10.8% rise of the EUR / JPY exchange rate from the low in May (114.39) to set a fresh annual high on August 13 (126.75).

With price appears to be a bearish Rising Wedge pattern in the last 12 months, a substantial break to the downside could be in favor if sellers could snap up the 14-week uptrend of the exchange rate as support at the June high (124.43).

That being said, the positive steepening of the 50- (122.85) and 200-DMA (120.88) suggests a general shift in sentiment from bearish to bullish and any pullback in EUR / JPY rates could be significantly supported by an influx of buyers .

Therefore, although price seems to be rising to slide back to support at the level of May 2019 (125.23), extended declines may not occur if psychological key support at the 125 level remains intact.

A decline could allow EUR / JPY to shake off the overbought readings on the RSI and regroup for a push to fresh annual highs, as buyers may be defeated by resistance on the monthly swingtop (126.75).

AUD / JPY Daily Chart – Triple Top as Ascending Triangle?

Daily AUD / JPY chart created with TradingView

AUD / JPY rates seem to have cut in Rising triangle pattern at key resistance, with a series of lower lows and stagnant heights signaling that sellers can run on steam as they try to defend the psychologically pivotal 77 level.

Moreover, the RSI seems to be focusing on a pressure to overbought territory as it is hanging on Bullish territory above 60 and the buying pressure may decline if it breaks above its downtrend from annual extremes.

References of overpowering could likely coincide with AUD / JPY climbing above key resistance at the June high (76.78) and potentially validating a topside break of the Bullish Continuing Triangle continuation pattern.

An implied measured movement suggests that price could push to test the 81 level for the first time since April 2019.

Turning around, a lack of trend support could invalidate the bullish pattern and ignite a pullback to the 200-day moving average (73.15) and 61.8% Fibonacci (72.72).

– Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss