The Australian dollar has made a notable recovery against the Japanese yen over recent days, as the risk-sensitive pair comes back into favour with traders and investors.
AUD/JPY analysis shows that a rally back towards 77 seems likely if the price moves above the 76 resistance level.
AUD/JPY medium-term price trend
The Australian dollar has been rising against the Japanese yen over recent days, as global equity markets are boosted over hopes of a second coronavirus stimulus package. Traders and investors pay close attention to the AUD/JPY pair, as it is often a reliable gauge of risk sentiment in the foreign exchange market.
AUD/JPY technical analysis highlights that a large bullish reversal pattern continues to loom over the higher time frames. The daily time frame shows that a complex inverted head-and-shoulders pattern, with more than 1,600 points upside projection, remains in play.
Looking more closely at the bullish reversal pattern, the neckline is found around the 76.60 resistance level. It is possible that the pair trades in a range between the 70 and 76.60 levels, as the pattern forms multiple right-hand shoulders to complete its overall structure.
Overall, watch out for an eventual breakout above 76.60 to take the AUD/JPY pair beyond 90.
AUD/JPY short-term price trend
AUD/JPY technical analysis highlights that the pair has a bullish bias while the price trades above the 75.15 support level. The one-hour time frame is also showing the presence of a smaller inverted head-and-shoulders pattern. According to analysis, the neckline of this bullish reversal pattern is currently located around the 76 technical region.
Strength above the neckline of the pattern may create short-term buying pressure, and encourage bulls to rally the pair back towards the 77 technical area.
AUD/JPY technical summary
AUD/JPY analysis shows that an extremely large, complex inverted head-and-shoulders pattern continues to unfold across the daily time frame.