- AUD/JPYReverses off confluence resistance
- Immediate focus lower- broader bullish invalidation 84.72
- Updated targets & invalidation levels
Chart Created Using FXCM Marketscope 2.0
Technical Outlook: AUDJPY is responding to confluence resistance at 86.31– this level is defined by the 61.8% retracement of the December – January range, the late January/February high and the median-line extending off the January 15th outside reversal-day low. Note that the daily momentum signature is also testing resistance at 60 and could cap the advance near-term. Likely to get some more pullback here but the trade remains constructive near-term while above 84.72– a break below this level would suggest a larger correction may be underway targeting the lower median-line parallel, currently around ~82.15. This setup was highlighted in my Top Trading Opportunity of 2016.
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Notes: A basic trendline support extending off the late-February low converges on the 2015 low-day close at 84.72 and we will reserve this level as our near-term bullish invalidaiton level. Interim resistance stands at the 2015 low-week reversal close at 85.47 with a breach above 86.31 targeting subsequent topside objectives at the 200-day moving average at 87.31 backed by the 2016 open at 87.54.
A quarter of the daily average true range (ATR) yields profit targets of 35-39 pips per scalp. Added caution is warranted heading into the release of the RBA minutes tonight with the Australian employment report & the FOMC policy decision likely to fuel volatility in risk-sensitive pairs. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount!
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Check out SSI to see how retail crowds are positioned as well as open interest heading into February trade.
Relevant Data Releases
Other Setups in Play:
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- GBP/USD Coils Below Key Resistance- Bullish Invalidation 1.3920
- USDOLLAR: Key Levels to Know Heading into NFPs, March Open
- USD/CHF Rebound Stalls at2016 Open- Bearish Invalidation 1.0072
—Written by Michael Boutros, Currency Strategist with DailyFX