Distributive policy

Advance towards 97.00 on dovish BOJ policy

  • A breakdown in stock distribution will breathe fresh blood into Australian bulls.
  • The dovish stance adopted by the BOJ weakened the yen against the antipodes.
  • The RSI (14) is trying to break into the bullish range from 60.00 to 80.00.

AUD/JPY reversed in a narrow range of 95.43 to 95.57 after a firmer rebound from 95.20. The pair is likely to extend its gains as the Bank of Japan (BOJ) kept a dovish stance in its monetary policy announcement. On a broader note, the asset is extremely bullish and turns every corrective move into an impulsive rally.

On an hourly timescale, the cross is consolidating near critical resistance, which is placed off the June 21 high at 95.31. The asset forms an inventory distribution that indicates the initiation of long positions by market participants, who prefer to enter a time correction phase after a juggernaut rally.

The asset firmly broke above the 20-period exponential moving average (EMA) at 95.31 during the Asian session. Additionally, the 50-EMA at 95.00 acted as crucial support for the counter.

Meanwhile, the Relative Strength Index (RSI) (14) is trying to break into the bullish range from 60.00 to 80.00. An occurrence of the same will infuse fresh blood into Australian bulls.

For further upside, the asset needs to clear Wednesday’s high of 95.76 for a June 8 closing high of 96.47. A break of the latter will take the asset to a new seven-year high of around 97.00.

Alternatively, a decisive drop below the June 28 high at 94.72 will drag the asset towards round level support at 94.00, followed by the July 15 low at 93.15.

AUD/JPY hourly chart