FxWirePro: Watchout for AUD/JPY breaks below 88 for further weakness

The pair has tested trendline resistance at 88.04 and bounced back, is currently trading at 88.27, further weakness can be seen only on breaks below 88, pair could then test 86.50 levels and further below could expose 85.42 levels.

• For now the pair has taken trendline support at 88.04 and edged higher, but strong resistance is located at 89 levels (Double top 19,25 Nov, trendline)
   
• RSI is biased lower, remains below 50 on both monthly and weekly charts, Daily Stochs have also rolled over from overbought levels, could see further downside
   
• The Aussie has been unable to benefit from the better than expected rise in the Aus company operating profits data. Moreover, traders remain cautious ahead of macro updates from China and Australia due tomorrow
   
• While on the other hand  Kuroda's speech offered the much-needed respite to JPY bulls. Kuroda talked up Japanese economic outlook, citing that the final demand is improving and the fundamentals remain strong
   
• The Yen also remained supported by upbeat retail sales data which showed a rebound to 1.8% y/y in October, after slipping 0.1% in September (markets expected a 0.9% rise)

Recommendation: Good to sell rallies 88.40, SL: 89.20, TP1: 87.40, TP2: 86.90
Resistance Levels:

R1: 88.44 (10 DMA)

R2: 88.65 (5 DMA)

R3: 89 (Double top 19,25 Nov, trendline)

Support Levels:

S1: 88.04 (Session low, Trendline support)

S2: 87.77 (Nov 18 low)

S3: 87.38 (Nov 17 low)