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On April 24th I wrote about how AUDJPY was unlikely to encounter much demand until 77.50.
The idea came about because of the false break above 79.80.
As is often the case, that false break triggered an aggressive and lasting move in the opposite direction.
I even pointed out how the 78.80 region was resistance in my April 24th post.
Sure enough, AUDJPY made it as high as 78.94 on April 29th before losing 180 pips as of today’s price.
A weekend gap brought the pair below (former) range support at 77.50. You can see where Monday’s session closed below this level.
That gap at 78.03 was closed early in Tuesday’s session.
In fact, the gap close was so precise that AUDJPY only managed a 78.04 print on Tuesday before dropping nearly 100 pips.
If you missed the gap close to get short, Tuesday’s bearish rejection candle could present a second chance opportunity.
The candle illustrates the influx of offers above former range support at 77.50.
It also means AUDJPY is vulnerable below 77.50 on a daily closing basis and keeps the pressure on the next key support level at 75.40.
The “daily closing basis” refers to the New York 5 pm EST close. These charts are required for trading price action.
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That was the closing price of the January 3rd flash crash.
It’s also approximately 200 pips below the previous range which also spanned just over 200 pips.
I favor selling AUDJPY while below the 77.50 handle on a daily closing basis.
However, don’t be surprised to see another retest of 77.50 as new resistance before sellers are ready for the next leg lower.
Key support comes in at 75.40 followed by 72.70.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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