AUD/JPY Outlook: Reversal Clues Threaten the Mighty Aussie Yen Trend

Author: Matt Simpson, Market Analyst

Date: February 19, 2026

Summary

The AUD/JPY currency pair has shown signs of a potential reversal as it approaches significant historical resistance levels. After a remarkable rally of over 28% since April, attributed to favorable trade developments, the momentum appears to be stalling, raising concerns about a possible pullback.

Technical Analysis

On the weekly chart, a bearish reversal pattern known as a "dark cloud cover" has formed near the highs of 2024 and 1991. This pattern, combined with a weekly close below these resistance levels, suggests that a retracement may be imminent. The Relative Strength Index (RSI) also indicates bearish divergence, signaling that the upward momentum is weakening.

Further analysis of the daily chart reveals that recent highs have respected the monthly R1 pivot as resistance. The daily RSI has shown bearish divergence prior to the recent peak, reinforcing the idea that the price action is nearing a cycle high.

Potential Downside Targets

While it is uncertain whether the peak for the week has been reached, the combination of the weekly reversal pattern and resistance levels suggests that traders may look to fade rallies while the AUD/JPY remains below 111. The 107 level is identified as a key downside target, coinciding with the monthly pivot point. A break below this level could lead to further declines towards the 106 handle.

Conclusion

In summary, the AUD/JPY pair is showing signs of a potential reversal as it approaches significant resistance levels. Traders should be cautious and consider the bearish signals from technical indicators, particularly the RSI divergence and the formation of a bearish reversal pattern. The next key levels to watch are 107 and 106 as potential downside targets.