Supply area near 90.00 aussie hammers, China retail sales drop

  • The rises in the yen were triggered when the asset reached the supply zone in the range of 89.75 to 90.05.
  • AUD/JPY hit hard after China showed an underperformance in its retail sales data.
  • The RSI (14) has shown a strong bearish move, which signals more weakness ahead.

The AUD/JPY pair saw a bearish move during the Asian session after hitting a high of 90.13. The Risk Barometer detected intense selling pressure after China reported annual retail sales at -11.1%, significantly below the consensus of -6% and the previous print of -3.5%. In addition, industrial production plunged to -2.9%, below estimated and earlier figures of 0.7% and 5% respectively.

Australian bulls were heavily hammered after the crossover attacked the supply zone in the 89.75-90.05 range. A failed attempt to establish above that of the supply was followed by a sharp drop to near 88.91, which shifted the market structure in favor of the bears.

The 20 and 50 period exponential moving averages (EMAs) at 89.36 and 89.30 respectively are expected to overlap, signaling consolidation moving forward.

Meanwhile, the Relative Strength Index (RSI) (14) showed a strong move from the bullish range of 60.00-80.00 to a consolidation range of 40.00-60.00.

To continue falling, the asset needs to drop below Friday’s low at 88.18, which will send it down to Thursday’s low at 87.31. A break of the latter will take the asset towards the round level support at 86.00.

On the other hand, Australian bulls could dictate the asset if it breaks above Monday’s high at 90.13. This will lead the asset to Wednesday’s high at 91.77, followed by the May 6 high at 93.00.

AUD/JPY Hourly Chart

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