On June 1st we looked at the AUDJPY and its recent break of trend line support. The level dates back to June of last year and was of assistance during the April 20th bounce less than two months ago.
In that June 1st commentary, I admitted that I favor shorts below 82.70. The relevance of that figure was the former twelve-month trend line, which was then acting as new resistance. Of course, being an ascending level, that price is now closer to the 83.00 handle.
That brings us to today’s retest. As you can see from the chart below, the AUDJPY is once again retesting former trend line support as resistance.
However, it’s important to keep in mind that this particular level is being respected on a daily closing basis (5 pm EST). In other words, attempting to trade this on the intraday charts is likely to get you in trouble. A glance at the 1-hour or 4-hour chart will illustrate my meaning.
So what’s the plan from here?
At the moment I’m just watching and waiting. Any bearish price action from the daily time frame could present a favorable selling opportunity.
But again, any daily close from here on out needs to occur below the 83.00 area. Otherwise, there’s a good chance the May 31st breakdown was a false move which could subsequently trigger a push higher.
For now though the level is intact as is my bearish bias. The next key support level comes in near the current 2017 lows at 81.50/80 followed by 80.30. Alternatively, a daily close back above the trend line would negate the bearish bias.
Note that volatility could pick up as today’s session progresses. Within the next hour, we have the much-anticipated testimony from the former FBI Director James Comey. Then as Friday’s session begins, we have the outcome of the UK elections.
The two events I just mentioned may seem insignificant as it relates to the Australian dollar, but the impact on the safe-haven yen could be quite pronounced.
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