In today’s technical analysis, we take a close look at the Australian Dollar to Japanese Yen (AUD/JPY) pair, which is currently shaping up a classic bearish head and shoulders pattern. This formation is highlighted with a blue rectangle on the chart and is drawing significant attention as price action tightens near a key support level.
The neckline, marked in orange, serves as the crucial point for this setup. Not only is it the lower boundary of the head and shoulders structure, but it also aligns with an important historical support level—one that held firm in March 2025. This confluence makes it a major battleground between buyers and sellers.
If the price closes a day or even an H4 candle below the orange neckline, it would trigger a confirmed sell signal, with the expectation of further downside momentum. The pattern would then be activated as a trend reversal structure, signaling the end of the recent bullish cycle.
Alternatively, if the price bounces off this level and pushes higher, it would suggest that buyers are still defending key territory. This rebound would effectively negate the head and shoulders structure, flipping the short-term sentiment back to bullish and invalidating the bearish outlook—for now.
In short, AUD/JPY is standing at a pivotal point. The next decisive move around this neckline will likely set the tone for the days or even weeks ahead.