I haven’t commented on the AUDJPY for quite some time, mostly because of the choppy price action that has consumed the better part of 2016. However, something occurred during yesterday’s session that could produce a favorable setup over the coming sessions.
Yesterday’s high of 80.30 tested an area that has several things going for it. I’ll start by listing each one, and then we’ll take a look at a couple of charts to see how they come together.
- Channel resistance that extends from the 2014 high at 102.83
- January and February lows which later rejected several advances between May and July
- The 50% retracement when measuring from the 2008 low at 55.09 to the 2013 high at 105.42
- The 23.6% Fibonacci retracement when measuring from the 2013 high at 105.42 to the current 2016 low at 72.43
The four factors above make for an area at 80.30/20 that’s worth keeping a close eye on.
Here’s how the 50% and 23.6% levels come together on the monthly chart:
And now we’ll plot the two-year descending channel along with the aforementioned lows and highs from 2016 on a weekly chart.
For those who trade from the daily time frame, watching for bearish price action in this area could be a prudent way to approach this.
However, if you’re looking for additional confirmation, there is an intraday pattern that has developed from the September 27th low that could trigger a short setup if broken.
A close below 4-hour support would open the door for a retest of the 76.15 area. But keep in mind that if the multi-year channel holds up, we could see a much larger move take shape over the coming weeks.
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