AUD/JPY eyes double top neckline

Having failed to hold above 10-DMA, the AUD/JPY cross breached the key rising trend line support on Tuesday and now looks set to test the double top neckline level of 87.65 [July 24 low]. 

The neckline support stands very close to 87.62, which is the 23.6% Fib R of 81.78-89.42. The cross currently trades around 87.85 levels. 

Upbeat housing data ignored

Aussie July building permits came-in at 10.9% m/m, beating the estimate of 1.5% by a big margin. The annualised figure printed at -2.3% vs. previous figure of -19.7%. 

The upbeat data failed to push the Aussie 10-yr bond yield into the positive territory. Thus, AUD failed to regain the bid tone. The sell-off in the cross would gather pace if the markets turn risk-off during the day ahead. Risk aversions would not only strengthen the offered tone around the AUD, but also boost demand for the Japanese Yen. 

AUD/JPY Technical Levels

The daily chart shows - bearish divergence followed by a breach of the rising trend line support. An end of the day close below 87.62 [23.6% Fib R] would confirm the double top breakdown and open doors for 87.00 [psychological level] and 86.73 [4-hour 200-MA]. On the higher side, breach of hurdle at 88.12 4-hour 100-MA] may yield a re-test of 88.83 [resistance on a 4-hour chart] and 89.00 levels.