AUDJPY has just printed fresh four-year lows on the back of mounting global concerns. It seems the safe haven status of the Japanese yen is once again in full effect.
Whether or not the fear factor swells to levels last seen in January and February is anyone’s guess, but based on some of the price structures I see across the more risk-sensitive pairings, it wouldn’t be a total surprise.
That “fear factor”, by the way, sits at 21.94 per the CBOE Volatility Index (VIX), which isn’t far off from the February high of 29.01. The current figure also represents a fifteen-week high for the index.
One such structure that hints at troubling times ahead is that of AUDJPY, which has now broken below key support at 78.30 on an intraday basis. I mentioned this level in last week’s forecast, noting that a close below it would likely trigger additional losses.
As for support, it’s relatively easy to spot. The intersection of the trend line that extends from the December 2015 high and the 74.40 horizontal level make this area a prime target should the yen cross close the day below immediate support.
Not only is 74.40 the 2012 low and a key inflection point on the weekly chart, but it’s also the 61.8 Fibonacci retracement when measuring from the 2008 low to the 2013 high.
The current session is far from over, but a daily close below the area outlined by 78.00 and 78.30 would spell trouble for the risk-sensitive cross.
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