AUD/JPY retreats as a Harami candle signals bulls may be running out of steam

• AUD/JPY bulls fail to break through psychological resistance at 97.00.
• The Relative Strength Index falls from overbought conditions as AUD/JPY bulls retreat.
• A Harami pattern on the AUD/JPY daily chart highlights market indecision.

The Australian Dollar (AUD) is weakening against the Japanese Yen (JPY) on Monday, as the steep bullish rally pertaining to the AUD/JPY pair shows clear signs of slowing.

At the time of writing, AUD/JPY is consolidating near 96.70, with the formation of a Harami candlestick pattern on the daily chart, reflecting market indecision.

This potential reversal signal arises as the pair approaches a critical resistance zone. AUD/JPY has recently broken above the 61.8% Fibonacci retracement of the November 2024 to April 2025 decline, located at 96.15, a level considered technically significant.

Additionally, the pair is trading just above the 200-day Simple Moving Average (SMA), currently set at 95.80. This long-term trend indicator, which has historically served as a dynamic resistance, may now be providing initial support.

AUD/JPY daily chart

Despite the near-term pause, the broader uptrend remains intact. The 50-day SMA is trending upward at 94.10, while the 100-day SMA continues to rise around 93.20, reflecting sustained medium-term bullish momentum.

However, the Relative Strength Index (RSI) is hovering just below the 70 threshold, suggesting that the pair remains near overbought territory and may be vulnerable to a technical pullback.

The appearance of the Harami pattern below the 97.00 resistance level underscores the growing hesitation among buyers. While the formation alone does not confirm a reversal, it does highlight reduced bullish conviction at a key technical juncture. Should the pair break decisively above 97.00, it could trigger further gains toward the 78.6% Fibonacci retracement level near 98.90.

Conversely, if downside pressure persists, initial support is expected at 96.15, followed by the 50-day SMA at 94.10. A break beneath these levels may open the door to a deeper correction toward the 50% retracement level at 94.21 or the 100-day SMA at 93.20.

While the prevailing trend remains upward, short-term technical signals are flashing caution. Without a clear breakout above 97.00, the pair may enter a consolidation phase or face a moderate correction as bullish momentum temporarily fades.