AUD/USD and AUD/JPY at the Cusp of Bullish Continuation

Forex Technical Update

Yesterday (8/2), AUD/USD and AUD/JPY were at the cusp off topping after Draghi disappointed the market which was generally expecting him to announce some kind of action. Instead he kicked the can down the road.

However, the support levels noted for the AUD/USD and AUD/JPY held the decline, and the market rallied through the 8/3 Asian-European session. The Friday (8/3) NFP was better than expected and both pairs continued rallying, now testing consolidation highs, and threatening bullish continuation.

AUD/USD 4H Chart 8/3/2012 10:00AM EDT

In the 4H chart, there are some bullish signals:
1) RSI remained above 40. A break above 60 reflects bullish continuation momentum.
2) The moving averages are almost in full bullish alignment. Extension higher should bring the 8SMA above 22SMA.
3) Excluding the spike, this week's highs near 1.0540 are broken.

The thing is, there is resistance at 1.0590-1.06. But above 1.06, the market exposes resistance pivots at 1.0770 and 1.0845. We still need to see a clear break below 1.0450 to call any topping here.

AUD/JPY 4H Chart 8/3/2012 10:05AM EDT

The AUD/JPY also stayed above this week's range support, and has already pushed above this week's and last week's range resistance and highs. This break is not only a break of the short-term range, but a medium term range going back to the beginning of July. If a pullback remains above the 82.00 level, the bullish outlook improves.

The breakout exposes a near term target of 83.20, and then a medium term target of 85.35.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of rex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.