FxWirePro: AUD/JPY capped below 5-DMA, eyes 50-DMA at 86, stay short

• AUD/JPY retraces dip below 38.2% Fib at 86.39, but upside capped below 5-DMA at 87.22.
   
• Technical studies are bearish. RSI below 50 and biased lower. MACD supports downside and stochs are biased lower.
   
• We see no signs of reversal, scope for test of 86 levels (50-DMA). Violation there could see drag upto 85.66 (July 5th low).
   
• The pair is extending downside after a 'Bearish Butterfly Pattern' on daily charts (noted in our previous call).
   
• Weekly charts show bearish Stochastics rollover from overbought levels, the pair failed to break above weekly 200-SMA.
   
• Breach of 50-DMA and daily cloud support raises scope now for test of weekly 20-SMA at 84.73.

Support levels - 86.08 (50-DMA), 85.66 (July 5th low), 84.87 (converged 200-DMA and cloud top)

Resistance levels - 87, 87.22 (5-DMA), 87.55 (23.6% Fib retrace of 81.48 to 89.42 rally), 88.06 (20-DMA)

Call update: We had advised to stay short in our previous call (http://www.econotimes.com/FxWirePro-AUD-JPY-on-track-to-test-50-DMA-at-86-stay-short-844470).

Recommendation: Bias lower, hold for targets.

FxWirePro Currency Strength Index: FxWirePro's Hourly AUD Spot Index was at -48.1192 (Neutral), while Hourly JPY Spot Index was at 66.6463 (Neutral) at 0540 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

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