AUD/JPY Double Bottom Breakout, Rally to Follow?

AUDJPY seems to have broken above the neckline of its double bottom pattern on the hourly time frame, signaling that a rally of the same height as the formation is due.

The chart pattern spans around 200 pips, so the resulting uptrend could take AUDJPY up to the 96.00 major psychological level next.

The 100 SMA is attempting a bullish crossover above the 200 SMA to signal a return in upside momentum, and the pair is already trading above both moving averages. This means that the dynamic inflection points could hold as support moving forward.

Stochastic is pointing higher once more, reflecting a return in bullish pressure before oversold conditions were met. RSI is also heading up, so AUDJPY could follow suit until the oscillator turns lower from the overbought region.

If resistance holds, AUDJPY could slump back to the bottoms around the 92.00 major psychological mark.

The RBA recently announced their monetary policy decision to hike interest rates by 0.25%, which was lower than the projected 0.50% increase. Still, the Aussie seems to be enjoying some upside against the yen since the BOJ is far from tightening monetary policy.

Also, the RBA noted that further rate hikes are in the cards, especially since inflation is still projected to increase in the coming months. As always, the size and timing of policy changes will hinge on incoming data and their inflation outlook.

Risk-off flows might still return to weigh on the commodity currency, though, especially since investors remain wary of a potential global recession and resurfacing geopolitical tensions from Russia.

Apart from that, traders remain on intervention watch when it comes to the yen since officials have been jawboning the currency and have also executed bond purchases to stem its decline recently.

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