The AUD/JPY pair currently exhibits a bearish outlook as it remains in a corrective phase within an ascending channel. As seen on the chart, the analysis points toward a potential Wave (3) move to the downside, aligned with Elliott Wave theory. The bearish flag still contains the price action, but early indications suggest a promising bearish setup.

Chart Overview

1. Structure and Wave Count:
   • The chart displays a three-wave correction labelled W-X-Y, following a larger Wave 1 decline.
   • After completing the corrective Wave Y, the pair has initiated a decline, which appears to form the beginning stages of Wave (3).
2. Key Observations:
   • The bearish Wave ((iii)) target aligns with the lower boundary of the ascending channel.
   • Sub-waves of Wave (3) ((i, ii, iii, iv, v)) are visible, with Wave ((i)) already complete and Wave ((ii)) appearing as a corrective pullback.
3. Invalidation Level:
   • The invalidity threshold for the bearish bias is set at 98.663. If the price breaks above this level, the Wave (3) scenario will be negated, indicating a potential continuation of bullish corrective action instead.
4. Price Action Dynamics:
   • Current price: 97.227 (as of the chart).
   • The downward momentum aligns with expectations for a sharp decline in Wave ((iii)) of the larger Wave (3), which typically exhibits the strongest price movement.

Key Levels to Watch

• Support Levels:
  • 96.500: Anticipated near-term target for Wave iii.
  • 95.000–94.500: Lower support zone, corresponding to the channel boundary and Wave v completion.
• Resistance Levels:
  • 98.663 (Invalidation Level): Break above this level invalidates the bearish structure.
  • 99.000: Psychological barrier, marking a critical resistance level.

Bullet Point Summary

• The AUD/JPY pair is poised for a Wave (3) bearish move, with downside targets near 96.500 and below.
• The current price remains within the bearish flag, which may act as support during the move.
• Invalidation Level: A break above 98.663 nullifies the bearish scenario and points to further corrective upside.
• Wave Count: Wave ((i)) is complete, and Wave ((ii)) is likely wrapping up, setting the stage for a strong Wave iii drop.
• Targets align with the lower boundary of the channel, extending below 95.000 in subsequent sub-waves.
• Monitor key resistance and support levels for confirmation of the bearish trend.

Conclusion

This analysis points toward a bearish continuation in AUD/JPY, with the completion of Wave (3) expected to bring significant downside movement. Traders should watch the 98.663 invalidation level closely and look for confirmation signals as the pair progresses through the sub-waves of Wave (3). As always, prudent risk management is key when trading volatile moves like this.