AUD/JPY - Correction gathering pace below 1-hr 200-MA

AUD/JPY is looking heavy following an early failure to hold above 1-hr 200-MA of 88.05 levels this Monday morning in Asia. The cross is currently trading around 87.80 levels; down 0.20% on the day. 

Bearish reversal confirmed

Thursday’s Doji (indecision) candle was followed by huge red candle, suggesting the rally from the low of 81.78 may have found the top at 89.32. Furthermore, the 1-hour chart now shows a bearish crossover between 50-MA & 100-MA. 

Thus, correction could gather pace, although as of now, a weaker-than-expected Japanese PMI release is capping losses around 87.75 levels. 

Signs of weakness in the AUD/JPY cross often serve as an advance warning of the risk aversion in the equity markets. It remains to be seen if the weakness in the AUD/JPY ends up pushing the Stoxx 50 index below the head and shoulders neckline support today. 

AUD/JPY Technical Levels

The immediate support is seen at 87.54 (23.6% Fib R of 81.78-89.32) ahead of 87.35 (weekly 5-MA) and 87.20 (4-hr 100-MA). On the higher side, a break above 88.05 (1-hour 200-MA) would open up upside towards 88.56 (1-hour 50-MA) and 88.62 (1-hour 100-MA).