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Today we saw a bit of a relief rally in some markets, including AUDUSD. The pair had fallen nearly 350 pips last week so a “green” day was expected at some point.
That said, today’s gain only managed to close the weekend gap as this pair still looks vulnerable. From here we can watch for a possible test of the .908 resistance level. Any bearish price action at this level could provide a nice short opportunity.
If the market is able to breach the .908 level, we can look to the next resistance area at .913 and again, watch for bearish price action which may provide a selling opportunity.
Summary: The pair is too far extended at the moment to justify a short position given the risk to reward. Therefore we can watch for a possible retest of the two resistance areas mentioned above and use any bearish price action as confirmation that the level is likely to hold.
USDJPY has been unrelenting since breaking out of the bullish wedge pattern on August 19th. Since that time the pair has managed a 480 pip rally with not much to show in the way of a pullback.
The pair is now trading above the 107 support level and has formed an inside bar on the daily chart.
If we move down to the 4 hour time frame we can see that a bullish pin bar has formed at support. So far this intraday pullback looks very well-supported on a 4 hour basis.
I’m not a huge fan of buying at these extended levels, but if this 4 hour pin bar is any indication, we may see a test of the 108.20 resistance level in the coming days. Trade this one at your own risk given the extended levels we’re currently experiencing.
Summary: Would like to see a more convincing price action buy signal at the 107 level before considering a long position. Support comes in at 107 with near-term resistance at the 108.20 level.
CADJPY analysis
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