AUD/JPY - Bearish outside day, top in place?

• Downside exposed after bearish outside day candle.
• Upbeat Japanese data favors break below key Fib level.

Having faced rejection at 89.00 levels for the fifth straight day, the AUD/JPY pair fell sharply to a low of 87.91 yesterday before closing at 88.21.

Yesterday's bearish outside day candle (yesterday's high and low engulfed the previous four daily candle's high and low) suggests the short-term top could be in place above 89.00 levels. That said, the pair is still holding above 87.91 (previous day's low) and 87.97 (23.6% Fib R of Nov low - Jan high).

However, the Fibonacci support could be breached soon, courtesy of upbeat Japanese data released today. The flash manufacturing PMI showed the output neared 4-year high in December and the Ministry of Finance reported a 9.3 percent year-on-year rise in Japanese exports in December.

The data sets show Japanese economy is firing on all cylinders and hence puts a question mark on the need to keep monetary policy accommodative. Thus, the Yen may find fresh bids and push AUD/JPY below 87.97 (23.6% Fib R of Nov low - Jan high).

AUD/JPY Technical Levels

A break below 87.91 (previous day's low) could yield 87.63 (Jan. 2 low) and 87.32 (100-day MA). On the other hand, a move above 88.30 (10-day MA) would expose resistance at 88.61 (1-hour 100-MA) and 89.00 (psychological levels).