The risk-sensitive AUD/JPY turned lower from a key resistance range in overnight trading, mirroring the price action on Wall Street where US stock indices gave up earlier gains to close at their lows Tuesday evening.
The AUD/JPY has now for the second time in as many weeks failed to break thru the prior long-term support at the psychologically-important 70.00 handle, which has now turned into resistance:
AUD/JPY Daily Chart
It is early days but rates could start to break down from here – possibly along with stock indices. So, it is definitely worth watching as it can be a good barometer for risk appetite.
The bears still have some work to do as short-term supports such as 69.00 and 68.65 still remain intact, as too does the bullish trend line.
In so far as the bulls are concerned, they need to wait and see whether the AJ will break and hold 70.00 resistance in the coming days before looking for long setups. Alternatively, a deep pullback and a bullish reversal signal at some point down the line could be another way to look for long trades.