AUDJPY's sizeable head and shoulders pattern
21 March 2023
AUDJPY today is a battle between two weak currencies. The Australian Dollar is suffering due to the dovish minutes from the RBA and Japanese Yen is losing because of the general risk ON mode, where safe havens like Yen are generally ditched. In this battle, the AUD is still the losing party.
From the technical side, we can see a giant head and shoulders pattern (yellow), indicating that rises here are history and we should expect a start of a new bearish trend. What is needed for a proper sell signal is the price to break the blue horizontal support which, in this case, is the neckline. Today, we are testing this support that is holding up so far, but no one knows for how long.
The price breaking a blue line would be a sell signal but, close below, we do have a proper, long-term horizontal support coming from the tops in 2021 (green). This may be a great obstacle for the sellers. In my opinion, the sentiment is negative and we should see AUDJPY trading lower soon. My negative view will be cancelled if the price breaks the red dynamic resistance, but chances of that happening are currently low.