AUD/JPY traded lower on Tuesday, breaking below the upside support line drawn from the low of May 12. Combined with the fact that the rate is also trading below a downside line taken from the high of Jun 9, this increases the chances for further declines, but we prefer to wait for a dip below 92.23 before we get more confident on that front.
This could encourage the bears to push the action toward the 91.20 zone, defined as a support by the inside swing high of May 18 or the 90.67 barrier, marked by the inside swing high of May 26. If neither hurdle can halt the slide, a lower break could extend the fall towards the low of May 26, at 89.65. Another break below 89.65 could allow the bears to test the 89.00 zone, marked by the low of May 19.
Shifting attention to our short-term oscillators, we see that the RSI turned down and crossed again below its 30 line, while the MACD lies below its zero and trigger lines. Both indicators detect strong downside speed and support the notion of further declines in this risk-linked exchange rate, but as we already mentioned, we would prefer to wait for a break below 92.23.
On the upside, we would like to see a clear break above 94.30 before examining whether the bulls have gained complete control again. This will take the rate back above the aforementioned diagonal lines and may allow advances towards the high of Jun 10, at around 95.55. If the bulls are unwilling to stop there, then we may see them extending their jump towards the peak of Jun 8, at 96.85.
