AUD/JPY Price Analysis: Flirting with head-and-shoulders support

• AUD/JPY's daily chart shows a head-and-shoulders bearish pattern. 
• Dovish RBA expectations favor breakdown and deeper losses. 

AUD/JPY is currently trading largely unchanged on the day near 74.43, having put in a low of 74.21 early Wednesday. 

A convincing close below 74.43 would confirm a head-and-shoulders breakdown or a bearish reversal pattern on the daily chart and open the doors to 70.40 (target as per the measured move method). 

A breakdown looks likely as the second wave of the coronavirus cases is accelerating across Europe and in the US and is weighing over the risk assets. More importantly, it's threatening to derail the global economic recovery. As such, the better-than-expected Aussie third-quarter consumer price index (CPI) inflation released early Wednesday is unlikely to deter the RBA from cutting rates next month. 

That said, the bearish case for AUD/JPY would weaken if the pair finds acceptance above 75.00. In that case, the focus would shift to 76.52 (Oct.  9 high). 

Daily chart

Trend: Bearish

Technical levels