AUDJPY Price Sinks Into Demand Zone

Market Analysis – July 18

The AUDJPY currency pair has experienced a significant decline, marking five consecutive days of downward movement. This persistent downward spiral has driven the price to the key demand level of 105.00.

AUDJPY Key Levels

• Demand Levels: 105.00, 101.30
• Supply Levels: 106.60, 108.20

AUDJPY Long-term Trend: Bullish

Despite the recent decline, the long-term trend for AUDJPY remains bullish. The Relative Strength Index (RSI) indicated that the price was overbought in early July, which led to the subsequent drop below the Moving Averages of periods nine and twenty-one.

Although the decline is notable, the overall market structure remains bullish. Until there is a price sweep below the swing low of 103.00, the bullish market structure is intact.

AUDJPY Short-term Trend: Bearish

In the short term, the market structure is bearish, particularly on the lower timeframes. Scalpers looking to short the pair should exercise caution, especially as the price approaches the demand zone at 105.00. The demand zone may witness significant buying interest, leading to potential price volatility and choppiness. Shorting through this demand zone could be risky as buyers may mount a defence, causing a shift in market structure.

In summary, while the short-term outlook for AUDJPY is bearish, the long-term trend remains bullish. The use of the lower timeframe ChoCh (Change of Character) may help increase the risk to the risk-to-reward ratio of forex signals.

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