During yesterday’s session we looked at what could be a new range developing for the NZDJPY. Similarly, the AUDJPY entered a new range last week following the August 12th close above 87.80.
Friday’s session retested this area as new support and buyer’s responded. In fact, the pair nearly reached both support and resistance with Friday’s 160-pip candle.
Sellers made a stand during yesterday’s session at 89.35 resistance. This is the current 2017 high and is also a level that attracted buyers in both February and July of 2015.
Seeing these two highs at the same level tends to attract speculation about whether or not this is a double top pattern. But no matter how you look at it, the fact is we don’t have enough information to make that call one way or the other.
What we can do is stay patient and use price action to signal what’s likely to happen next. If this does unfold as a double top, the 85.80 handle is the level to watch. It’s going to take a daily close (5 pm EST) below it to confirm the reversal pattern.
However, we may not have to wait that long to find out. A daily close below the 87.80 support area would be an early sign that sellers have regained control. It would also expose neckline support at 85.80.
On the other hand, a daily close above 89.35 would suggest that the next leg higher is underway. It would expose the November 2015 high at 90.70, which is an area that had previously served as support in late March and early April of the same year.
Although we don’t know the outcome just yet, one thing did catch my attention during yesterday’s session. The measured objective for the possible double top formation lines up perfectly with the current 2017 low at 81.50.
Whether that’s of any significance is, of course, yet to be determined.
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