AUDJPY: Barely holding On To Medium Term Support Following Volatility in AUD and JPY Majors
The daily candle chart below shows the medium term price history of the Australian Dollar (AUD) versus the Japanese (JPY) over the past 12 months and trading at 92.86 right now (as of publication).
This pair is known by the AUDJPY symbol and also known as Aussie-Yen and is trying to barely hold on to a short term bullish support line (point 7 in green on chart) after opening lower in today’s trading session before reaching a low of 92.63. The momentum had been bearish with the pair closing lower in 5 of the last 6 trading days, as it followed along a developing short term bearish line (point 2 in magenta).
The pair was last covered in August before it had broke out of the medium term bearish channel (point 3 in red) before ascending the short term bullish channel that it has just broken below.
If the bullish channel (point 7) is not regained, and the bearish momentum of the last week continues, a target near 89.00 could be envisioned along the short term bearish resistance line (point 2 magenta).
If the bullish channel (point 7) is re-entered and holds prices, a steep short-term bullish support line (such as point 1 in aqua) could developed and returning prices towards recent highs above 95.00.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 94.01 with a Limit to take profit @ 94.91 and a stop-loss @ 93.69 Risk/Reward Summary: Limit risk = + 90 pips profit / (-32) Stop-loss risk = Gain to Loss ratio = 2.81
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 92.55 with a Limit to take profit @ 91.83 and a stop-loss @ 92.96 Risk/Reward Summary: Limit risk = +72 pips profit / (-41) Stop-loss risk = Gain to Loss Ratio = 1.75
Medium Term Chart: