Equity market weakness has given life to the Japanese yen, and with it JPY-crosses have been under pressure. The theme looks set to continue, and today I’ll highlight one of the more attractive opportunities given where it currently lies on the chart. Additionally, we’ll re-examine the AUD/NZD short idea put out a couple of months back as it finally extends lower towards the target.
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AUD/JPY at resistance, has 400+ pip potential
AUD/JPY has been working its way higher in recent trade, but in doing so it is taking on a bear-flag pattern (most visible on the 4-hr time-frame). On the daily there is a confluence of resistance between price running back to lows created a year-ago and a trend-line running down off the January high.
A stop placed at 82.68 above recent swing highs should allow sufficient room for shorts to work out. The targeted end-zone is a good distance lower at the U.S. election spike-day low of 7678 down to 7616. Along the way profitable swing-trades can be scaled out of, while traders looking to trade much shorter-term time-frames can use the 4-hr chart to identify set-ups along the path of least resistance until the end objective is met. For example, the first set-up could be the bear-flag once broken.
The initial entry (at market) to stop is a little over 110 pips, while the end target is over 450 pips lower, providing a 1:4+ risk/reward profile.
AUD/JPY Daily Chart (at resistance)
AUD/JPY 4-hr Chart (bear flag)
AUD/NZD Trade Update – Nearing initial target
AUD/NZD has taken it’s sweet ole time trading lower, but the short initiated from the break of the ‘head-and-shoulders’ formation is finally nearing the initial target at the April 2015 trend-line. The thinking on this end is to give it a little room to see if it can’t first break, to possibly extend the trade, but should buyers show up, then booking profits will be prudent.
AUD/NZD Daily Chart (nearing target)
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—Written by Paul Robinson, Market Analyst
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