AUD/JPY 4H Chart: Rectangle

Source: Dukascopy Bank SA
© Dukascopy Bank SA
Following the Apr 27-May 6 sell-off AUD/JPY entered a horizontal trend. This pattern now implies that the rallies will be contained by resistance at 80.50, while dips will be limited by support at 78.50. However, taking into account that a decline preceded formation of the pattern, the bears should eventually overpower bulls and force the price our of the rectangle to the downside. In this case the near-term target will be the February low at 77.60, while the longer-term objective is likely to be the 2012 low at 74.50. Positioning in the market favours such a bearish scenario, as the Aussie is heavily overbought in the SWFX market—74% of open positions are currently long.
© Dukascopy Bank SA
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