As you can see, AUD/JPY got rejected from the 97.50 area and is now trading 100 pips lower in the 96.50 zone.
That’s probably the most decent pullback from the pair since it blasted up from the 90.50 area at the start of the month!
What makes the setup even more interesting is that the 100 SMA has crossed below the 200 SMA to signal a possible bearish reversal.
AUD/JPY 15-min Forex AUD/JPY 1-hour Forex Chart by TV
But wait! Before you pull the trigger on your sell orders, you should know that AUD/JPY is still seeing decent support around its current levels.
For one thing, 96.25 lines up with a trend line support that’s been valid since last week. It also doesn’t hurt AUD bulls that the trend line aligns with the S2 (96.28) of today’s Standard Pivot Points.
This week’s market themes could help make or break AUD/JPY’s June uptrend.
Earlier today, the People’s Bank of China (PBOC) cut two of its benchmark interest rates by 10 basis points to help spur economic growth.
Traders mostly felt the move was “mid” and continued to price in their concerns about China’s economic growth.
The Reserve Bank of Australia’s (RBA) meeting minutes didn’t help either. Though the central bank raised its interest rates this month, the decision was “finely balanced” among its members.
Bad news for those who expected a more decisive vote that would have signaled further rate hikes in the foreseeable future.
Unless we see market-changing headlines, I’m betting on global growth concerns, expectations of weaker global PMIs, and less hawkish RBA expectations to continue to weigh on AUD/JPY.
But AUD/JPY has already fallen by just under 100 pips today, which tracks with the pair’s daily average volatility.
So, I’m looking to short after a bit of an intraday pullback.
I could start shorting at today’s S1 (96.77) or wait for the pair to retest the Pivot Point (97.22) closer to the 100 and 200 SMAs.
I’m planning to take profits somewhere around today’s lows but I’ll keep my eyes peeled on any bearish momentum to see if AUD/JPY could break its trend line support and make new intraweek lows.
What do you think? Is AUD/JPY ready for a short-term reversal?
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