Fan Yang
1
All posts from Fan Yang
Fan Yang in Fan Yang,

AUD/JPY - Would You Pull the Trigger Again?

The AUD/JPY has been in a multi-session downtrend after breaking a consolidation that formed at the end of last week. The 1H chart shows the AUD/JPY taking steps lower from a high around 91.90 to 90.24 this week. The latest downswing was the strongest of its kind, but the pullback is also the strongest one so far this week. 

AUD/JPY 1H Chart 8/20
(click to enlarge)

Now, as price approaches and maybe cracks 91.00 during the 8/20 session, the question arises - should we short again. Now, it seems like if we are still short, we would want to put the stop above the previous resistance pivot around 91.50. Above that, price would break above the 200-, 100-, and 50-hour SMA as well as the falling trendline and previous resistance pivot. And if the RSI pushes above 60, and even tags 70, we might have a bullish reversal, or at least a shift away from the bearish mode. 

If stop is 91.60, entry is 91.20, and target is 90.40 and 90.00, then the reward to risk ratios for the two targets are 2:1 and 3:1 respectively. The reward to risk is there. The technical resistance levels are there. But is the fundamentals there as well? Who knows. The AUD was strong after the RBA did NOT say that the AUD was too high. The AUD and JPY are both weak, due to their dovish central banks. Perhaps, the RBA will turn less dovish earlier and the AUD/JPY could be bullish in the medium-term, but will have little relevance to what is happening with the AUD/JPY in the 1H chart during the 8/20 and 8/21 sessions. So we are probably relatively "safe" from fundamental risk in the near-term. 

The low on the year at 89.15 is still in play, especially if this week's downtrend holds structure (price holds under 91.50, preferably even 91.20). 

AUD/JPY Weekly Chart 8/20(click to enlarge)

The weekly chart shows that a break below 89.15 (2015-low) would open up the 2013-low at 86.40.