On Friday I published a rather extensive commentary on the AUDJPY. The idea was to watch for a breakout from the recent consolidation that has persisted over the last few months.
That consolidation, by the way, has carved a smaller ascending channel which has the look of a bear flag. If true, it puts the objective at the 76.00 handle.
When I published that commentary on Friday, the AUDJPY was still trading at 82.33. Today we see the risk-sensitive pair hovering just below the 81.00 handle.
Not only has the pair lost ground in four straight sessions, but it’s also trading below the ascending channel support I mentioned on Friday.
However, as always, the daily close (New York 5 pm EST) is key. There’s still plenty of time for the market to recover back above that 81.20 area.
If the pair does close below channel support at 5 pm EST, it opens the door to lower levels including the objective that’s 500 pips below the current price at 76.00.
Note that the current 2018 low at 80.50 could attract some buyers. In fact, that’s what we see happening at the moment with this 40 pip bounce.
I remain short from last week and will consider adding to the position following a daily close below ascending channel support. As long as the broader descending channel is intact, a move to 76.00 over the next few weeks is a real possibility.