Trade view /
16 June 2016 at 9:55 GMT
The long-term bias remains bearish with rallies continuing to find sellers. We currently trade at the lowest level since the week beginning June 4, 2012 with the downward move showing no clear sign of slowing.
The next noticeable downside barrier the cross will encounter is the Fibonacci confluence area from 74.21 to 74.76. This is closely followed by 74.00 which has been a pivotal level over recent years.
Prior to today, the cross had been trading within an expanding wedge formation since the beginning of May. Today, however, we have seen an impulsive move to the downside and a breakout of this wedge. This overnight selloff has seen outside bars being posted on several intraday charts which is negative for short-term sentiment.
The previous support level of 77.50 has been clearly broken and this level turns to resistance. This level coincides nicely with our bespoke resistance at 77.41 so we will look to get short around here.
The wedge base resistance is currently at 78.05 and previous horizontal support is seen around 78.25 so placing a stop above these levels gives a few upside barriers between the trigger and stop.
Our target for this trade will be in front of the previously mentioned Fibonacci confluence area as we would expect to see mixed and choppy price action if/when this area is met.
Entry: sell AUDJPY at 77.50.
Stop: A break of 78.50.
Time horizon: four to 10 sessions.
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Source: Saxo Bank
— Edited by Michael McKenna
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