AUDJPY at Key Inflection Point Ahead of RBA and BOJ

·    October 31, 2016

·      October 31, 2016

·    October 31, 2016

This week’s AUDJPY open gave us a helpful reminder of why the 4-hour time frame is superior to anything lower when it comes to trading breakouts.

I mentioned the 4-hour ascending channel last week and again over the weekend. The idea is that a close below support would break consolidation and potentially trigger a bearish move that would expose the September lows at 76.15.

The new trading week opened with a substantial 35 pip gap down. The opening price put the pair below channel support, but as always a 4-hour close is needed to confirm the break.

That close never came.

If you study the chart below you can see that buyers managed to push the AUDJPY back above the level before the 9 pm EST close. The last-minute surge kept the channel intact and also kept me on the sidelines.

But by their very definition, terminal patterns such as the structure below have to end eventually. That end will either come with a daily close above two-year channel resistance near 80.20 or a 4-hour close below channel support, currently near 79.65.

At the moment it’s a waiting game to see which scenario pans out. But due to the multi-year downtrend, I’ll only be interested in a bearish move below channel support.

Note that we have several upcoming events that are sure to stir things up starting with the RBA rate statement at 11:30 pm EST followed by the BOJ equivalent shortly after that.

With this in mind, it would be prudent to wait for these events to pass before considering an entry.

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AUDJPY 4-hour ascending channel

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  1. Hello Justin… You have stressed on 4h candle close in your analysis.. could you please tell you follow EST or NY close timings to see 4h and 1d closings?

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