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AUDJPY at Critical Juncture Ahead of BoJ

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AUDJPY has been a roller coaster ride for several years now. But what may look like random price action is, in fact, a collection of technical patterns.

We’ll start with the large descending channel that extends from the 2014 high, a structure that has directed the pair lower since its inception almost two years ago.

AUDJPY seventeen-month descending channel

In the middle of this seventeen-month pattern, we have the former support level of an even larger ascending channel. The formation you see in the chart below eventually gave way to the aggressive 1,000-pip decline between July and August of last year.

AUDJPY two channels on the daily chart

With the big picture set, we can dive into what’s happening on the daily chart to get a sense of where the pair might trade in the near-term.

Although sellers came out in force at a familiar level in late March, the bulls have managed to climb right back to the 86.40 handle. The higher low in April and consecutive retests of 86.40 are relatively bullish, or at least a sign to stay clear of shorts at the moment.

But there is an event this week that could finally push the pair out of its comfort zone.

On Thursday at 1 am EST, the BoJ is set to convene for their quarterly outlook report followed by a press conference, which occurs eight times each year. This one-two punch typically rattles markets, especially if traders interpret the rhetoric as overly hawkish or dovish.

However, I’m not so interested in the technicalities of the event itself, but rather how markets respond to it. And with AUDJPY trading just below a confluence of resistance, a reaction in either direction could give us clues as to the future path of the yen cross.

I’ll stand aside for now and wait for favorable price action to set up following Thursday’s event. A close above 86.40 would open the door for a move to the 88.30 resistance level while a failure at 86.40 would re-expose the 83.40 handle.

Want to see how we are trading this setup? Click here to get lifetime access.

AUDJPY trading at a confluence of resistance at 86.40

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8 comments
James Turcinov says

Love these posts Justin. Your new look website is also refreshing. Cheers.

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    Justin Bennett says

    James, that’s great to hear. Pleased you like the new look. Thanks for the feedback. 🙂

    Reply
Craig says

Really nice analysis Justin. Always enjoy your insights and commentary.

Reply
    Justin Bennett says

    Craig, thank you. Glad you liked it. Thanks for stopping by.

    Reply
Carol Capner says

The AUDJPY has hit the 86.400 area many times on the daily, Initially I thought it may be a pivot point. This resistance area seems strong.

Reply
    Justin Bennett says

    Strong, indeed. Down 400 pips in two days.

    Reply
Jim Jenkins says

Great looking website, layout is perfect, awesome job, makes it easy to look at the recent trade setups with an informative analysis ….

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    Justin Bennett says

    Jim, thanks for the feedback. Much appreciated!

    Reply
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