Medium term
Trade view / 26 May 2016 at 8:55 GMT

Bias remains to the downside in AUDJPY

Director / PIA First
United Kingdom


Since late 2014 the pair has been contained in a large bearish channel formation. 
The last three weeks have been highly indecisive, highlighted by consecutive inside weekly bars.
The MACD oscillator is highlighting bullish divergence, indicating the downwards move is beginning to weaken and we could potentially see a correction higher.

However, the lack of reversal signals leave us to remain bearish overall and the bias remains focused on lower levels.


The daily chart shows the recent consolidation period in more detail. The pair has posted mixed daily results for the last 15 days with spikes seen in both directions. This has resulted in a pennant formation being formed which we currently find ourselves trading midway between.

Yesterday saw an initial dip find buyers above the previous swing low of 78.15 and the downward move being overturned, resulting in a bullish hammer candle being posted. This has led to a further rally through today, however, we view this rally as an opportunity to set shorts in line with the overall bearish move lower.

Historically, 80.00 has been a pivotal level. Bespoke resistance is seen just below here at 79.90, providing a perfect area to set shorts. A rally through this level would face resistance at the pennant top, currently at 80.30, then at the previous swing high of 80.63. Therefore we would look to place our stop above here.

Looking to target levels now and the obvious initial target would be the pennant base around 78.35. Proceeding this we would look to target just above the February low of 77.57.
Note that these parameters would therefore offer a reward/risk ratio of virtually 2:1 at the first target.

Management and risk description

After the triggered trade moves below 78.90, we would look to move our stop to entry level.


Entry: sell at 79.90

Stop: 80.70

Targets: 78.35 and 77.65

Time horizon: Medium term.

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

 Source: Saxo Bank

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail