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AUD/JPY at 110.70: Is the Rally Losing Momentum at Resistance?
Forex
Summary:
On 20 October 2026, AUD/JPY is trading around 110.70 after rebounding strongly from an eight-month low near 108.65 last week. The pair has recovered as hawkish Reserve Bank of Australia commentary and stronger Chinese economic growth supported the Australian dollar...
Sell
CLOSEDAUDJPY
End Time
110.700
Entry Price
110.400
TP
110.900
SL
110.939 +0.194 +0.18%
300
Points
Profit
110.400
TP
110.399
CLOSING
110.700
Entry Price
110.900
SL
Market Overview
The Australian dollar is benefiting from a combination of stronger domestic rate expectations and improving sentiment toward China, Australia's largest trading partner. Recent Chinese GDP data and hawkish comments from RBA Assistant Governor Christopher Kent have helped AUD/JPY recover toward 110.70. This recovery is important because it suggests that buyers are returning after the pair's decline toward 108.65. However, stronger momentum also means that a SELL entry must be supported by evidence of rejection rather than an assumption that the rally has gone too far.
The Japanese yen remains vulnerable because the Bank of Japan's policy outlook is uncertain. A cautious approach to further tightening can leave Japanese interest rates relatively unattractive compared with Australian yields, encouraging carry trades that favour AUD/JPY. Nevertheless, intervention risk remains relevant when yen weakness becomes excessive. Any official warning or abrupt shift in Japanese policy expectations could trigger a rapid reversal in yen crosses.
The immediate macroeconomic conflict is therefore clear: Australia's relatively hawkish policy outlook supports the Australian dollar, while possible intervention and changing risk sentiment could support the yen. For a short-term SELL at 110.70, the strongest rationale is a technical rejection at resistance, not a broad assumption that the yen must strengthen.
Market Sentiment
The latest technical dashboard shows a strong-buy reading, with 12 moving-average buy signals and nine bullish technical-indicator signals. RSI(14) is 70.32, MACD is positive at 0.170, and ADX(14) is 51.04. These readings indicate strong directional momentum, but RSI above 70 also warns that the rally may be stretched in the short term. Importantly, an overbought RSI is not itself a sell signal: strong trends can remain overbought for extended periods.
The key distinction is between a temporary pullback and a genuine reversal. If AUD/JPY fails near 110.70–110.75, forms a lower high and breaks its nearest M15 swing low, a tactical short may become attractive. If price consolidates above 110.70 and continues making higher highs, selling would mean fighting an active bullish trend.
For execution, prioritise a bearish candle close and confirmation from the Stochastic (5,3,3) rather than entering solely because RSI is elevated. A failed breakout followed by a retest of 110.70 from below would offer stronger evidence that resistance has held.
Technical Analysis
Bollinger Bands (20,0,2): The latest dashboard places the classic pivot at 110.64, with resistance at 110.67, 110.71 and 110.74.
The SELL setup becomes more convincing if price tests the upper M15 band near 110.70–110.74 and closes back inside the envelope. If the bands expand upward and candles continue closing near the upper band, bullish continuation remains the higher-risk scenario for sellers.
Ichimoku Kinko Hyo (9,26,52): Live M15 Tenkan-sen, Kijun-sen and cloud values could not be independently verified. Look for price to break below Tenkan-sen and Kijun-sen, with a bearish crossover and resistance from the Kumo overhead. If price remains above a bullish cloud, a sell should be treated as a short countertrend scalp rather than a confirmed reversal.
Stochastic (5,3,3): The preferred signal is a bearish crossover from the upper region, ideally after price rejects 110.70–110.74. Confirmation improves if the crossover coincides with a lower high and a bearish candle close. If Stochastic remains elevated while price continues breaking resistance, avoid forcing the short.
The first downside references are 110.60 and 110.53, followed by 110.40 if selling accelerates. A sustained M15 close above 110.74 would weaken the immediate rejection setup. These levels are intraday pivot references, not guarantees of price movement.
Trade Recommendation
Entry: 110.70
Take Profit: 110.40
Stop Loss: 110.90
Risk Warnings and Investment Disclaimers
You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.
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