FxWirePro: AUD/JPY breaks baseline of rising wedge, likely drop further

On weekly technical chart, the yellow circled area is where it has broken the baseline of rising wedge formation. It has served as the strong supply zone at that juncture.

The pair has failed to hold onto the crucial resistance at around 87.723 levels which the pair has already tested as resistance earlier several times in the past and collapsed.

We reckon that it was unable to breach that level authoritatively, as a result more weakness is seen in this pair at current level.

The current prices have fallen way below 21DMA on daily chart and headed towards south.

More notably, leading oscillators like RSI and slow stochastic curves began showing divergence to the previous uptrend rallies; so we believe this as bears are getting active.

RSI is currently trending at around 46.5849 that is likely to show downward convergence to the price dips from here onwards.

In addition to that bearish crossover on stochastic curve has been maintaining from 80s amid abrupt bulls interruption in between which is signifying again more retracement is likely and it gives us one more reliable indication that the pair is likely to retest strong support levels as mentioned below.

Thus, as it failed to hold the above stated resistance level, it would determine the next downward direction of trend.

The next crucial support is only at around 86.410 87.575 and 84.444 region on weekly chart.