The AUDJPY has been trading in a 330 pip range since breaking above the 83.70 handle on November 24th of last year. And after the third retest of resistance on Friday, the pair looks ready to test 83.70 support once more.
With the latest 4-hour close, the yen cross has broken trend line support from the December 29th low. This break could offer a quick range play given the 170 pips that lie between the current price and the 83.70 support area.
The risk-off sentiment that began yesterday looks to be spilling over into today’s session. And if this keeps up we could see the AUDJPY move toward key support and perhaps even lower over the coming days and weeks.
Using the distance of the current range, a break below 83.70 would expose another 330 pips of downside potential. But first, we need to see former trend line support hold as new resistance.
While an intraday break could work here, given how volatile markets have been lately, I’m opting to wait for a daily close before considering an entry. This will give me greater conviction in the trade idea and could also offer an area to “hide” my stop loss.
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