In today’s technical analysis, let’s take a look at AUD/JPY, which is showing early signs of a trend reversal.
The process started last week, when the price broke out to the upside from a wedge pattern. That breakout was the first signal that the previous downtrend might be losing momentum.
Since then, the price has started to build a more constructive structure. We are now seeing higher highs and higher lows, which is a basic requirement for an uptrend to develop.
This suggests that buyers are slowly gaining control, but the move is not fully confirmed yet.
The key level to watch now is the yellow horizontal resistance. This is the last major barrier for the buyers.
If the price manages to break and close above this resistance, it would confirm the reversal and generate a strong long-term signal to go long.
Until that happens, the setup remains promising, but still incomplete. The structure is improving, but the final confirmation depends on that breakout.