• Weak medium-term momentum may kickstart a medium-term downtrend phase for AUD/JPY.
• Key short-term resistance stands at 93.70 with a potential downside trigger at 92.80.

This is a follow-up analysis of our prior report, “AUD/JPY: Minor downtrend remains intact” published on 28 June 2023. Click here for a recap.

Since its 19 June 2023 high of 97.67, the price actions of the AUD/JPY have continued to shape lower highs despite a retest and rebound on its key 200-day moving average after it printed an intraday low of 91.79 on 28 July 2023 ex-post Bank of Japan (BoJ)’s flexible yield curve control announcement on the 10-year Japanese Government Bond.

Technical analysis suggests that the AUD/JPY is now at heightened risk to evolve into a medium-term downtrend phase.

Fig 1:  AUD/JPY medium-term trend as of 21 Aug 2023 (Source: TradingView, click to enlarge chart)

Last Friday, 18 August, AUD/JPY managed to stall its prior three days of decline at a key support/inflection level of 92.80 which is being defined by a confluence of elements; the former swing high areas of 26 January/14 February/21 February 2023, and medium-term ascending trendline from 24 March 2023 low of 86.06.

However, elements are not showing signs of any bullish reversal at this juncture with bearish momentum reading seen in the daily RSI oscillator as it inched lower from the 50 level and has not reached oversold condition.

Fig 2:  AUD/JPY minor short-term trend as of 21 Aug 2023 (Source: TradingView, click to enlarge chart)

The price actions of AUD/JPY have oscillated within a minor descending channel in place since 15 August 2023 minor swing high of 94.87 which suggested that further potential downside may materialize at least in the short-term horizon.

Watch the 93.70 key short-term pivotal resistance and a break below 92.80 near-term support exposes the next support at 92.00 (also the 200-day moving average) in the first step.

On the other hand, a clearance above 93.70 invalidates the bearish bias to see the next intermediate resistance at 94.90 (also the 50-day moving average).