AUDJPY recently busted above a falling trend line on its 4-hour time frame, suggesting that a reversal from the downtrend is underway. Price could still retest the broken resistance, which might hold as support.

Applying the Fibonacci retracement tool shows that the 61.8% level is closest to the broken trend line around 74.64. A shallow pullback could already find support at the 50% Fib at 75.11 or the 38.2% level near 76.00.

The 100 SMA is still below the 200 SMA, though, so the path of least resistance is to the downside. In other words, support levels are more likely to break than to hold. Then again, both indicators are starting to turn higher and the gap between the two is narrowing to reflect weakening selling pressure.

A bullish crossover could confirm that buyers are returning. These moving averages line up with the 50% to 61.8% Fib levels to add to their strength as support.

Stochastic is already dipping into the oversold region to indicate exhaustion among sellers, and turning back up could mean that buyers are ready to resume the climb. RSI has more room to move south, so a deeper correction might be underway.

The Australian dollar could be in for more gains as risk appetite has improved globally. For one, the uncertainty related to US elections is over and traders simply have to keep tabs on the transition of power. Many expect smoother trade relations with China, which is Australia’s top trade partner, under the Biden administration.

With that, demand for the safe-havens like the lower-yielding Japanese yen could take a hit as traders pursue higher-yielding assets and currencies. Improving pandemic-related conditions could also continue to be positive for the Australian dollar, especially since the Land Down Under has seen consistent improvements compared to its Western counterparts.