FxWirePro: AUD/JPY on track to test 50-DMA at 86, stay short

• AUD/JPY is hovering around 38.2% Fib at 86.39, bias lower.
   
• We see scope for test of 86 levels (50-DMA). Violation there could see drag upto 84.87 (converged 200-DMA and cloud top).
   
• The pair is extending downside after a 'Bearish Butterfly Pattern' on daily charts.
   
• Technical studies are bearish. RSI below 50 and biased lower. MACD supports downside and stochs are biased lower.
   
• We note a bearish Stochastics rollover from overbought levels on the weekly charts.
   
• The pair is extending downside after failure to break weekly 200-SMA. Scope now for test of weekly 20-SMA at 84.73 on break below daily cloud.

Support levels - 85.98 (50-DMA), 85.66 (July 5th low), 84.87 (converged 200-DMA and cloud top)

Resistance levels - 87, 87.30 (5-DMA), 87.55 (23.6% Fib retrace of 81.48 to 89.42 rally), 88.09 (20-DMA)

Call update: Our previous call (http://www.econotimes.com/FxWirePro-Bearish-Butterfly-Pattern-on-AUD-JPY-good-to-go-short-on-break-below-8782-830953) has met all targets.

Recommendation: Book partial profits at lows. Lower trailing stop to 87.30. Hold for 86/ 85.70/ 85.

FxWirePro Currency Strength Index: FxWirePro's Hourly AUD Spot Index was at -104.905 (Bearish), while Hourly JPY Spot Index was at 142.271 (Bullish) at 0800 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

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