The AUDJPY is in the process of testing a key trend line that extends from the June 2016 low. The first bounce from this level was the November 9th session low, which was also the start of the so-called “Trump rally.”
Well, that rally may be starting to unwind. We can see from the second chart below that the trend line which has been a key supporting factor to this rally is under pressure once again today.
This comes after the pair just retested the trend line at 81.50 between the 19th and 20th of April. So as we can see, AUDJPY bears are beginning to increase their push for a move lower, particularly so far in today’s session.
From a much broader perspective, I still maintain that the risk sensitive AUDJPY is heading much lower over the coming months. In fact, I wouldn’t be surprised to see an eventual move to multi-year lows near 56.00 over the long-term.
The monthly chart below illustrates why I believe such a move is more than just possible given what we’ve seen since the year 2000.
Of course, a move of that magnitude will take months if not years to play out. Also, holding a short AUDJPY position for that length of time is probably not the best way to express a broader risk-off bias.
With that said, the AUDJPY could present an incredible near-term opportunity for those who share a bearish view. A daily close below 82.40 is the first step needed to show that today’s price action is more than just noise.
Below that we, of course, have the current 2017 lows at 81.50 followed by 80.30 and 78.45 to name a few key levels I’ll be watching.
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