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It was fairly quiet across the Forex market yesterday due to the U.S. holiday. However we have two potential setups brewing in both AUDJPY and GBPUSD. Let’s start with AUDJPY.
The pair has been moving within a broader, slow-moving uptrend since early 2009 when the market found support around 55.50. Since that time AUDJPY has gained 4,000 pips and is now resting at sub 100 levels.
Moving in for a closer look, we can see that the pair has been in a downtrend since November 21, 2014, when the market found resistance above the 102 handle. During the past seven weeks, the pair has respected trend line resistance that is best seen on the 4 hour chart.
From here we can look for either a break of trend line resistance or trend line support. I will note, however, that trend line resistance in this case is much more defined than trend line support. Therefore I’m mostly interested in a break to the upside, which would give us a really nice level to work with.
If a break of trend line resistance occurs, we can look to the 98.50 area as a potential target. This level coincides with the September 2014 high as well as the 50% retracement from the November 2014 high to the January 2015 low.
Summary: Wait for a possible break of trend line resistance on a 4 hour basis and then watch for bullish price action on a retest as new support. Key resistance comes in around 98.50.