The downward sloping 50-DMA line continues to cap gains in the AUD/JPY cross this Wednesday morning ahead of the China industrial production, retail sales release. The cross was last seen trading around 82.95, while the 50-DMA was seen at 83.64.
Falling tops around 50-DMA
A falling tops formation is seen on the daily chart. What is interesting is that since mid May the falling tops have coincided with the 50-DMA hurdle. For one week now, the pair has had a tough time breaching the 50-DMA resistance. Intraday moves above the average have been short lived. A couple of Doji candles at 50-DMA also warrant caution, although the follow through has been anything but bearish.
The immediate focus is on the China data due at 02:00 GMT – Retail sales are expected to hold steady at 10.7%, while industrial production is tipped to climb 6.4% on a year – slowing from 6.5% in April. Fixed Asset Investment is pegged at 8.8% on year, down from 8.9% a month earlier.
Aussie June Westpac consumer confidence may not move markets in a big way unless there is a significant deterioration in the number.
AUD/JPY Technical Levels
A break above 83.04 (50-DMA) could yield a re-test of 83.40 (June 9 high). A daily close above the same would mark the breach of a falling tops pattern and open up upside towards 84.00 (zero levels). On the downside, breach of support at 82.59 (June 12 low) would open doors for a pullback to 81.90 (June 5 low) and 81.77 (May 18 low).