AUD/USD technical analysis:

Buoyed by bullish risk sentiment, the Australian dollar ended higher against its US counterpart on Wednesday and broke a two-day bearish phase.

The weekly timeframe main support zone at $0.6968-0.7242 has recently seen bulls gain momentum. Although despite recording a fifth consecutive session in the green last week, the bulls are struggling to reach the resistance at $0.7501. The upward trend in lead times could help address the poor bid:

Longer term – the monthly timeframe – has depicted a downtrend since August 2011, suggesting that the 12.6% correction from mid-February highs at $0.8007 (2021) on the weekly timeframe could be the start of a bearish phase and not a downside buy correction of the 2021 advance from the pandemic lows of $0.5506. This (despite the recent rise) puts a question mark over weekly major support. Should a breakout on the downside occur, a weekly support at $0.6673 and a 50% retracement at $0.6764 can be seen.

Wednesday ended at the bottom of the 200-day simple moving average at $0.7316, after Tuesday tunneled through the value. If the SMA offers resistance, it shines the technical spotlight on a decision point of $0.6964-$0.7040. Alternatively, the recovery of a position above the SMA signals the strength of the weekly main support and suggests that the resistance of the daily trendline, taken from the high of $0.8007, is vulnerable.

An additional technical observation is the double bottom pattern ($0.6991). You will notice that price has dethroned the pattern’s neckline ($0.7314), with the pattern highlighting a profit target at $0.7660. The Relative Strength Index (RSI) on the daily timeframe also reveals the value turning slightly past the centerline of 50.00: positive momentum.

Shaped by a 50% retracement at $0.7266 and a 38.2% Fibonacci retracement at $0.7260, this H4 base has seen support in recent trade. On the upside, an H4 Fibonacci cluster is seen between $0.7412 and $0.7392, a sheltered area below the H4 Quasimodo resistance at $0.7451. A deeper read of the price action on the H1 timeframe has buyers and sellers opposing Quasimodo resistance at $0.7335, a level aided by the 200-day simple moving average on the daily timeframe . $0.73 may offer support if retested, but the breakout of $0.7335 reveals resistance at the H1 Quasimodo support at $0.7366 and a 61.8% Fibonacci retracement.

Technical outlook:

The H1 Quasimodo resistance at $0.7335 and the daily time frame 200-day simple moving average at $0.7316 potentially offering resistance could pull the H1 below $0.73.

On the other hand, weekly price breaking out of main support at $0.6968-0.7242 and H4 bouncing from support around $0.7260 may support the move above H1 Quasimodo resistance at 0 $.7335 to target H1 resistance at $0.7366 and possibly $0.74.

USD/JPY Technical Analysis:

Hopes for talks between Russia and Ukraine sparked a risky move on Wednesday. Demand for the safe-haven Japanese yen waned and bolstered USD/JPY supply.

USD/JPY’s recent outperformance should come as no surprise given our recent trend studies:

The trend of this market favors buyers at the moment. The currency pair has been rising since the start of 2021, clearly visible on the weekly time frame. With this in mind, the overall longer-term trend has been up since 2012 (check the monthly time frame).

The 21.5% correction from June 2015 to June 2016 provided a buying opportunity, as did a subsequent 14.8% correction from December 2016 to the pandemic lows formed in early March 2020. The weekly Fibonacci projection of 1.272% at ¥116.09, as you can see, has remained a headwind since the start of this year. Should the sellers strengthen their grip, weekly channel support, extended from the ¥102.59 low, could be an area we see entering the frame.

The daily picture also remains unchanged:

The daily chart has been tracing an ascending triangular pattern (generally seen as a continuation arrangement) since December 2021 between Quasimodo resistance at ¥116.33 and an ascending line drawn from the ¥112.53 low. The ¥116.33 reversal would allow analysts to plot a pattern profit target by extending the “baseline” distance (blue vertical box) from the breakout point. A pullback below the ascending line would put demand facing supply from ¥112.66 to 112.07 in the picture.

Not only is the zone in the company of a 78.6% Fibonacci retracement at ¥112.00 and a 50% retracement from ¥112.55, but technicians will recognize the 200-day simple moving average widely watched hosted in the area at ¥112.48. Note that the Relative Strength Index (RSI) is also rebounding from support between 40.00 and 50.00 (a “temporary” oversold range since May 10 – common view in trending markets).

Regarding our current position on the H4 timeframe, you will see the unit break through the range resistance at ¥115.78 on Wednesday and then hold the barrier breached as support. This can be seen as an early signal that we are heading towards the daily timeframe Quasimodo resistance at ¥116.33. A similar pattern is evident on the H1 period. Two Quasimodo resistances at ¥115.75 and ¥115.69 were engulfed and then retested to form supports, an action highlighting a potential approach to ¥116.

Technical outlook:

Given the possibility of further upside on the higher timeframes, and with the H4/H1 timeframes breaking through (and retesting) the supports around ¥115.70, an extension above ¥116 could be seen. This is positioned closely with the Fibonacci projection of 1.272% at ¥116.09 and Quasimodo daily resistance at ¥116.33.