AUD/JPY is hitting a key resistance zone ahead of top-tier data releases!
Will we see a breakout today? Or will the consolidation pattern hold for another day?
Let’s take a look at AUD/JPY’s 1-hour chart for clues!
AUD/JPY 1-hour Forex Chart by TV
I don’t know if you noticed but AUD/JPY bears have been successfully limiting AUD/JPY’s uptrend by defending the 91.00 – 92.25 zone.
In fact, AUD/JPY is now hitting the trend line resistance, which is juuuust under the R1 (91.37) level of today’s Standard Pivot Points.
It also helps AUD sellers that Stochastic is hanging around its “overbought” levels.
Is AUD/JPY ready to break out of its trend line resistance? Or will the symmetrical triangle pattern hold this week?
We have a couple of potential catalysts to consider.
For one thing, China is dumping a bunch of producer and consumer data in a few hours. Markets currently expect stronger leading reports from the world’s second-largest economy but downside surprises could probably have a bigger (bearish) impact on “risky” assets like AUD.
Global growth concerns also extend to the U.S. with debt ceiling talks, retail sales reports, and a bunch of Fed speakers scheduled between now and Australia’s jobs data.
Reports pointing to weaker U.S. economic growth or a more hawkish Fed may weigh on risk appetite and pull AUD/JPY lower.
Finally, the Reserve Bank of Australia (RBA) will be printing its meeting minutes before we see Australia’s jobs data. If the central bank turns out to be more hawkish than markets are already expecting, then AUD could gain support and break above AUD/JPY’s resistance even before the report’s release.
For now, I’m keeping close tabs on how AUD/JPY reacts to its resistance area.
AUD/JPY’s daily average volatility puts the possible daily high around last week’s highs (91.80ish) and daily low at the 90.50 Pivot Point line.
Downside surprises from China’s data dump can keep the triangle pattern intact and drag AUD/JPY to 90.50 if not the 90.25 zone.
But if the risk-friendly trading environment extends to the next trading sessions, then I’ll also be ready to trade a possible upside breakout and trade retests of the 91.80 or 92.50 previous highs.
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