• The AUD/JPY edges lower as the Asian session begins, almost flat during the day.
• Risk-aversion favors AUD/JPY downside, though support levels at around and below 92.00 might cap selling pressure.
• A break of a falling wedge might send the pair towards 97.00 before correcting towards 93.30s.

The AUD/JPY tumbles after recording two days of gains blamed on a gloomy market mood spurred by investors positioning ahead of the US inflation readings, China’s coronavirus reemergence, and broad safe-haven strength across the board.

At 92.55, the AUD/JPY lost almost 0.80% on Monday’s session, in which the pair began trading near the pivot point of the day, around 93.20. Then the cross rallied shy of 93.70, plunging afterward towards the daily lows around 92.30, finally settling down around current levels.

AUD/JPY Daily chart

The AUD/JPY depicts the formation of two different wedges, one rising and inside of it, another one falling. The former suggests that the AUD/JPY might be headed downwards, while the latter indicates that buying pressure remains, so the cross-currency pair still has another leg up.

The AUD/JPY price action is very close to the top trendline of the falling wedge, so that's the first scenario to discuss. If that plays out, the AUD/JY would break upwards, aiming toward its measured target profit right at the top-trendline of the rising wedge, around the 97.20-50 range.

Once that is achieved, the AUD/JPY might correct towards the bottom-trendline of the rising wedge and could probably break immediately, targeting 86.00, or print a subsequent leg-up at fresh YTD highs around 98.05 before plummeting towards the bottom-trendline of the wedge, followed by a break targeting 87.00.

AUD/JPY Key Technical Levels