AUD/JPY has dropped 5.5% from August highs finding a price zone where major reversals have started. Also coincides with June close – July open price.

AUD/JPY

Watching closely for trend line break and a hold above for confirmation to enter.

Fundamentally it is quite difficult to go against the Japanese Yen for its haven qualities in global uncertainty, but with that 5.5% drop, a bounce opportunity is possible for AUD/JPY.

AUD/JPY

 

Key Points:

  • Daily – Price cluster zone with 200 EMA. Multiple touches in historical data.
  • Price below the 200 EMA – Caution
  • Price below the 50 EMA – Caution
  • Watching for a cross above trend line. If you are comfortable trading flags, one may present above the trend line.
  • Must watch price around the 50 EMA
  • RSI breaks trend and range simultaneously for momentum

 

Key Levels:

Support – 74.486, 74.00

Resistance – 75.00, 50 EMA, 200 EMA, 76.00, 76.800

Entry Zone:

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

Optimal Entry – 74.450

Supporting Entry – 74.500

Candle Reversals for entry OR flag pattern for break out

  • Bullish Hammer
  • Bullish Engulfing
  • Bullish PiercingCandlestickFlags

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 below 74.00 – 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 74.450 – Target 1 76.00 = 3x Reward to Risk

Optimal Entry 74.450 – Target 2 76.800 = 4.6x Reward to Risk

Supporting Entry 74.500 – Target 1 76.00 = 2.6x Reward to Risk

Supporting Entry 74.500 – Target 2 76.800 = 4x Reward to Risk