Short term
Trade view / 19 August 2016 at 8:15 GMT

AUDJPY bears show no sign of letting up

Director / PIA First
United Kingdom

Price action has been mixed and volatile over recent weeks with spikes seen in both directions. Last week saw an initial move to the upside be firmly rejected, posting a shooting-star type candle.
Selling pressure has continued through into this week and currently trades at the lowest level in five weeks. The move currently shows no sign of slowing with the medium term focus on the 74.50 – 75.00 area.

Last Friday’s bearish engulfing candle has led to a further selloff this week. Rallies towards the daily Ichimoku Cloud were rejected yesterday and again overnight leading us to expect any gains to be limited over the coming days.

Drilling down to the intraday chart, we can see that the cross posted a Double Bottom formation after a short consolidation period near the 261.8% Fibonacci extension level of 76.46 (78.65 to 77.82). An aggressive break through the formation saw the market trade to within 5 pips of the formation’s measured move target of 77.28, however the gains were quickly rejected. 

The selloff has continued overnight and we currently trade just above previous support of 76.30.
Following a break of this support, the proceeding downside barrier is the 61.8% Fibonacci pullback of 75.80 from the 72.28 to 81.49 move. We would expect any consolidation around this area to be shortlived with our focus being toward 74.50–75.00 as previously mentioned. 

Management and risk description
Once the first target is reached move the stop to entry and continue to look for 74.60.


Entry: Sell AUDJPY on a break of 76.20.

Stop: 76.80.

Targets: 75.00 & 74.60.

Time horizon: 2 to 5 sessions.

Time horizon:2 to 5 sessions

Hourly chart showing double bottom break

 Source: Saxo Bank. Create your own charts with SaxoTraderGO click here to learn more

Daily chart highlighting potential target and support
Source: Saxo Bank

Weekly chart
Source: Saxo Bank 

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more


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