Just like the USDJPY, the AUDJPY fell below a significant level last week. The 81.50 area was carved out as the 2017 low in April of last year.
The level also came under fire earlier this month on March 5 and again on the 19th and 21st.
Last Wednesday’s close below 81.50 was the same day the USDJPY lost the 105.50 handle. I don’t believe that to be a coincidence as the two levels have played critical roles in directing price action for both pairs.
You may also be aware that the Japanese yen pairs often move in tandem, particularly during risk-off periods. We saw this type of risk-averse sentiment kick in late last week, but things have cooled a bit so far this week.
Whether or not today is a temporary setback for sellers is yet to be seen. However, as long as levels like 81.50 on the AUDJPY and 105.50 on the USDJPY hold on a daily closing basis (New York 5 pm EST), I will stay bearish.
I haven’t entered here yet as I’m waiting to see what happens during the retest of 81.50 as new resistance. I won’t consider a position without first seeing some bearish price action.
If I do decide to short the AUDJPY, the monthly chart shows a trend line that would serve as a profit target.
My reason for waiting to enter is due to the volatile conditions of late combined with the distance between today’s price and the 10 and 20 daily EMAs (see chart below). The latter suggests that some consolidation is in order before the next push lower begins.
Alternatively, a daily close at 5 pm EST back above 81.50 would negate the bearish outlook and re-expose the 83.30 area.