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Forexpros.com Daily Analysis - 03/08/2011 0 comments
The Australian Dollar started to exhibit weakness against the USD just a few days ago, but in relation to the Japanese Yen, it has been sliding for some time. We can see that the most recent major high was at 90.02, established in April and it has been down from there for the AUD/JPY.
While the selloff has not been steep, it has been steady, bringing the price down to 82.44. The price established a well-defined channel and for now, it stays within its boundaries. Every time one of the channel lines was touched, a minor reversal followed. Currently, the AUD/JPY is again testing the lower line, possibly leading to a bounce. Of course, eventually, the price will move out of the channel, but for at present the latest history favors a small-scale reversal.
The Stochastic indicator might be helpful here. To date, during the span of this channel, oversold reading of this indicator corresponded with a test of support. That is also true for the resistance, but with fewer examples. In addition, current candlestick line is in shape of a hammer, a bullish reversal pattern. It is not complete yet, so it might be wise to wait until the end of the day for confirmation. With all these elements in place, the AUD/JPY could rally, perhaps to 85.00.
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