Rsi Signals Balance Not Momentum
The 14-day Relative Strength Index (RSI) is at 50, after easing from overbought levels above 70 earlier this month. This points to balanced conditions rather than strong buying or selling pressure. If the pair bounces, it may target 111.50 and then the nine-day EMA at 111.69. A move above 111.69 could open a retest of the all-time high at 113.96, set on March 11. On the downside, support sits near 110.60 at the channel floor, then the 50-day EMA at 109.60. Below that, 108.00 is the next round-number support. The technical analysis was produced with the help of an AI tool.Trading Strategies Around Key Support
Given the current situation with AUD/JPY around the 111.00 mark, we are at a critical decision point. The pair is testing the bottom of its long-standing ascending channel, a technical signal that often precedes a move lower. This suggests that positions betting on a continued uptrend face immediate risk. Fundamentally, the pressure is mounting from both sides of the pair. Recent data from early this month showed Australian inflation softened to 3.2%, reducing the urgency for the Reserve Bank of Australia to maintain its hawkish stance. Meanwhile, market chatter is growing louder about the Bank of Japan potentially signaling another small rate hike in its April meeting, which would strengthen the yen. This divergence in central bank outlooks supports a move down in the pair. For traders anticipating a breakdown, buying put options with a strike price below 110.50 could be a strategy to profit from a drop towards the 50-day EMA near 109.60. Selling futures contracts is another direct way to position for this potential decline. However, we must acknowledge that the broader uptrend is still technically intact as long as we hold above that 50-day EMA. Looking back to the fourth quarter of 2025, we saw a similar dip below 109.00 get aggressively bought, reminding us that bearishness can be premature. This balanced RSI reading near 50 also signals indecision rather than outright selling pressure. For those who believe the support will hold, a strategy could involve selling put options with a strike price around the 109.50 level, collecting premium on the expectation that the pair will not fall that far. Alternatively, a bull call spread could offer a low-cost way to bet on a rebound toward the recent highs near 113.00. This approach would benefit if the current test of support is just a temporary pause. Create your live VT Markets account and start trading now.
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