The AUD/JPY (Australian dollar versus the Japanese yen) has begun exhibiting bullish intent since printing a bottom at ¥95.52 earlier this month. However, while defined higher highs and higher lows are visible, a pennant pattern is forming. This demonstrates that although price action is establishing higher highs, upside momentum is slowing and technically suggests that sellers could soon make more of a dominant show.

Ichimoku Support

Supporting further upside in the currency pair, however, the Ichimoku indicator shows the Conversion Line (blue at ¥97.61) crossed above the Base Line (red at ¥97.10). As you will see from the chart below, the area between these two dynamic values has been offering currency traders support to work with since turning higher.

Additionally, the Ichimoku’s Leading Span A (light green at ¥97.35) crossed above the Leading Span B (light orange at ¥96.86), consequently forming another support area to monitor (Ichimoku Cloud) should the above-noted Conversion/Base Line support zone give way.

Price Direction?

While the potential pennant pattern could mean sellers make their way into the market, the Ichimoku support areas may be challenging. Therefore, given sentiment is favoured to the upside for now and the pennant pattern has area to fill until reaching the apex, traders may opt for dip-buying from Ichimoku support for the time being.

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