In today's technical piece, I would like to discuss the Australian Dollar to Japanese Yen (AUD/JPY) pair. As noted in our morning commentary, there has been a significant shift towards safe-haven assets, causing the Japanese Yen to gain strength. This move in AUD/JPY did not occur randomly but at a crucial technical level.
Examining the H4 chart, we observe a notable shooting star candle marked by a blue rectangle. This candle formed after the price tested key resistance levels, specifically the highs from the end of April. The shooting star is a classic bearish reversal signal, and it indicated a strong potential for a downward move. Following this signal, the price indeed started to decline, confirming the bearish outlook.
The decline was further supported by a break below the black uptrend line, reinforcing the negative sentiment. Additionally, a divergence in the RSI oscillator signaled weakening bullish momentum, adding weight to the bearish case. Given these technical factors, we have a solid sell signal on AUD/JPY, and the negative sentiment is likely to persist. Traders should be aware of these indicators and monitor the pair for further bearish developments.