Forex: AUD/JPY holds previous support, more consolidation ahead?

FXstreet.com (Barcelona) - The AUD/JPY was able to overcome early selling pressure, bouncing off intra-day lows of 99.91 and closing down just 26 pips at 101.28. The pair is drifting lower on the Tokyo open, trading at 100.84 while the Nikkei is down 1%. The economic calendar out of Australia is fairly quiet in the coming session, with the National Australia Bank Business Confidence figures due out at 1:30 GMT. No economic reports are schedules for release for Japan.

“The flow of funds last week failed to show Japanese investors sending yen offshore as expected, and was a contributor to the yen cross selling on Friday and into early this week. The data this week is again showing Japanese investors not net buying foreign stocks and bonds,” noted Eamonn Sheridan of Forex Live

The FXStreet.com Trend Index reading on the daily chart remains slightly bullish, while the OB/OS Index reads neutral. Initial support comes in at 99.90 (low of today), followed by 98.70 (short term up trend line on daily chart). First resistance sits at 102.20 (high of today), followed by 102.75 (the 9dma). From a pattern perspective, it appears the daily chart may be in the initial stages of forming a pennant consolidation pattern which would have longer term bullish implications. It’s still early in the process, but worth monitoring in coming weeks.