The AUDJPY pair has formed a classic Inverted Head and Shoulders pattern, typically a strong bullish reversal signal. As seen on the daily chart, the left shoulder, head, and right shoulder have all developed with a clearly defined neckline near the 95.80–96.00 zone. Price action recently broke above this neckline but has since entered a consolidation phase between 95.00–97.00.
Bullish Scenario (Breakout Confirmation)
If AUDJPY decisively breaks above the 97.00 resistance with strong bullish momentum and volume, the inverted head and shoulders pattern will be fully confirmed. In this case, traders can expect an upward continuation toward:
Risk:
Sideways/Neutral Scenario (Extended Consolidation)
Another possibility is that AUDJPY continues to range between 95.00–97.00 for an extended period without a decisive breakout. This may happen if the market awaits more macroeconomic cues or central bank guidance.
Risk:
Risk Management Tips:
Conclusion:
AUDJPY is at a critical decision point. The inverted head and shoulders structure is bullish in nature, but the current consolidation adds uncertainty. Traders should stay alert for either a breakout for trend continuation or a breakdown invalidating the setup. Use proper risk management in all cases.
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Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
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Bullish Scenario (Breakout Confirmation)
If AUDJPY decisively breaks above the 97.00 resistance with strong bullish momentum and volume, the inverted head and shoulders pattern will be fully confirmed. In this case, traders can expect an upward continuation toward:
- Short-term Target: 99.00
- Medium-term Target: 101.00
- Measured Move Target: ~102.00 based on pattern height
Risk:
- False breakout followed by quick pullback under neckline
- Sudden JPY strength due to geopolitical or fundamental news
- AUD weakness due to interest rate decisions or economic data
Sideways/Neutral Scenario (Extended Consolidation)
Another possibility is that AUDJPY continues to range between 95.00–97.00 for an extended period without a decisive breakout. This may happen if the market awaits more macroeconomic cues or central bank guidance.
Risk:
- Whipsaws and fakeouts within the range
- Frustration due to lack of clear direction
Risk Management Tips:
- Wait for confirmation: Only trade post breakout or breakdown with candle close above 97.00 or below 95.00
- Use tight stop-loss: Keep stops just below support or above resistance zones
- Position sizing: Avoid overleveraging in rangebound conditions
- Diversify exposure: Don’t put all capital into one trade setup
Conclusion:
AUDJPY is at a critical decision point. The inverted head and shoulders structure is bullish in nature, but the current consolidation adds uncertainty. Traders should stay alert for either a breakout for trend continuation or a breakdown invalidating the setup. Use proper risk management in all cases.
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Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
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📣 Forex Telegram: t.me/tradzoofx
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.