AUD-JPY Forming A Trading Range

By: Mike Kulej The Australian Dollar has been one of the biggest beneficiaries of the intervention in the Japanese Yen by central banks in mid March. It has rallied about 1500 pips in relation to the JPY since, a very strong appreciation in such a short time. Last week the AUD-JPY reached a high for this price swing at 90.02. Since then it had drifted lower, including a relatively sharp sell off on Tuesday, which pushed it down to 86.85. That level is an intermediate term support, established by a minor low couple of weeks ago.

What's Happening Now?

As of right now, the intermediate term chart appears to be forming a trading range, very typical after a strong trend. It is hard to say, what the outcome will be – continuation of the rally or a correction of larger magnitude. That will be decided when the AUD-JPY moves through either the support or the resistance.

The support appears to be firm, with not only the previous low serving in this role, but also the Ichimoku cloud and the 100 SMA located nearby. On the upside, the recent high provides resistance at 90.02. Since this is psychologically important level (round number), the resistance might be solid, too, possibly locking the AUD-JPY into this trading range for some time. 
http://www.dailyforex.com/forex-technical-analysis/2011/04/AUD-JPY-Forming-A-Trading-Range/7676