Price breaking below daily pattern trend line and if held, could commence the exit sell down to levels we have not seen since June. AUD/JPY is at a critical zone to determine its fate.  

AUD/JPY

This week Japan announced Yoshihide Suga as their official Prime Minister, and US retail data overnight weakened supporting the Nasdaq and SPX drops. Analyzing USD/JPY, AUD/USD and AUD/JPY simultaneously can held build high probable decisions in your favour. 

AUD/JPY

 

Key Points:

  • Daily – Crossing pattern trend line
  • Daily – RSI at 50 mid-point
  • Price holding below the 200 EMA
  • Price holding below the 50 EMA
  • Price found support at 78.6% Fibonacci (September Low to September High Range)
  • IF: Target 2 is hit, a small core position can be held to target June zone seen in daily.

Key Levels:

Support – 76.440, 76.110

Resistance – 76.785, 76.930, 50 EMA, 200 EMA, 77.060

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 76.920

Supporting Entry – 76.785

Candle Reversals for entry

  • Bearish Shooting Star
  • Bearish Engulfing
  • Bearish Dark Cloud CoverBearish Candlesticks

 

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

IF: Price breaks above 77.080 level and violates 200 EMA – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Reward / Reward Targets:

Optimal Entry 76.920 – Target 1 76.440 = 5x Reward to Risk

Optimal Entry 76.920 – Target 2 76.110= 3x Reward to Risk

Supporting Entry 76.785 – Target 1 76.440 = 1x Reward to Risk

Supporting Entry 76.785 – Target 2 76.110 = 2x Reward to Risk