Yen Crosses: RSI Divergence seen on AUD/JPY

EUR/JPY H4

Is this a bullish break out or are we falling back into trading range between 103-104, or perhaps into a larger oscillating cycle between 100 – 104? Using RSI as reference, we know that 30 period RSI is heading lower before hitting the Overbought level of 70. Comparing historical data, we can see that price is heading higher while current RSI peak is lower than the previous peak found in Mid September. Though not a textbook example of RSI divergence, price may not be as bearish as indicated by current RSI levels.
GBP/JPY H4

128.0 remain a strong resistance against recent bullish movements. A fall in current price levels could bring range between 124 – 127 back into focus.

AUD/JPY H4

A better example of RSI divergence compared to EUR/JPY: Price was in a downtrend, and retraced back accordingly. Retracement not able to hit previous peak’s level, but RSI showing a higher peak compared to before. This is an indication that prices are rallying much faster as compared to before but yet this strong momentum is deemed not enough to push to previous record high.

Bottomline:

Yen crosses have gained bullish momentum significantly as speculation about BOJ intervention increased. Even when Fin Min Jojima said that they’re not requesting 20 Trillion Yen warchest from the Government, reaction online appears to interpret that as an indication that the amount is going to be bigger, and not smaller. As such, Yen could still weaken further this week, however, going by historical experience, we’ve seen BOJ failed time and time again to weaken Yen as safe haven flow continued to enter Japan. Will this time be any different?

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