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  • The Reserve Bank of Australia (RBA) kept rates unchanged at a record low of 1.5 percent and offered few hawkish or dovish surprises, leaving the bullish technical bias in the AUD/JPY intact.
  • The bull flag breakout seen in the AUD/JPY’s 4-hour chart indicates scope for a rally to 84.70 (target as per the measured height method).
  • The 50-candle exponential moving average (EMA), 100-candle EMA and the 200-candle EMA are trending north, indicating a bullish setup.   The relative strength index of 65 also shows room for a rally toward 84.70.
  • The bullish technical setup may fail if the Italian concerns weigh heavily on European equities and put a bid under the Japanese yen.

4-hour chart

Spot Rate: 82.35

Daily High: 82.48

Daily Low: 82.23

Trend: Bullish

Resistance

R1: 82.51 (Sept. 26 high)

R2: 83.15 (200-day moving average)

R3: 83.26 (July 31 high)

Support

S1: 82.23 (session low)

S2: 81.94 (10-day moving average)

S3: 81.22 (50-day moving average)