Last week we discussed the AUDJPY and the series of lower highs into key trend line support near 82.60/70. The “heavy” price action suggested a breakdown from the eleven-month level was imminent.
Sure enough, yesterday’s 82.28 close put the pair well below trend line support on a daily closing basis. This was all we needed to begin watching for selling opportunities on a retest of the level as new resistance.
Today’s high of 82.72 is no coincidence. This area is now serving as resistance after yesterday’s breakdown. And from where I’m sitting, it seems it’s only a matter of time before the pair retests the current 2017 low at 81.50.
Below 81.50 we have the 80.30 handle followed by 78.45. Note that these levels could change depending on how the pair acts on the way down. This notion of modifying levels as necessary is particularly appropriate given how choppy price action was throughout 2016.
As for the broader multi-year picture, I maintain the idea that the pair entered a new long-term bearish trend at the end of 2014. If this is the case, a move to 60.00 or below over the next couple of years should not be ruled out.
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