AUDJPY: Support at 89.00 Breached as Bearish Momentum Builds
The daily candle chart below shows the price history of the Australian Dollar (AUD) versus the Japanese (JPY), known as the AUDJPY pair, and currently trading near 88.29 (as of publication) today, after reaching a high just under 90.00 in the trading session still underway this Monday.
Volatility in the Japanese Yen, which caused it to strengthen considerably against the USD, appears to have driven the Yen lower in the AUD/JPY pair today, and caused it to again test below 89.00 and 89.50, two key support levels, as the price of AUDJPY dropped.
The target of 89.00 was mentioned in the last post about this pair in the Ideas You Can Trade series, and was a key area that the pair traded around and looked for support in the last two weeks, and now that this level has failed to hold in the current session - unless it is regained - the AUDJPY looks very bearish near current prices (hovering currently just over 88.00).
If the support above 89.00 is regained, then a bounce could propel the pair back to the range of 91.00-95.00 that it had traded within for the last few months.
However, considering that in seven of the last nine sessions the support that had been built around 89.00 (both above and below it) has now failed, as the pair moved even lower today, a reversal could be less probable. Support may be sought on a long term bullish support line (point 5 in blue on chart) or near 86.35 in the very short term.
Below are examples of how to trade a bearish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 90.07 with a Limit to take profit @ 90.45 and a stop-loss @ 89.74 Risk/Reward Summary: Limit risk = +38 pips profit / (-33) Stop-loss risk = Gain to Loss ratio = 1.15
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 87.94 with a Limit to take profit @ 87.55 and a stop-loss @ 88.29 Risk/Reward Summary: Limit risk = +39 pips profit / (-35) Stop-loss risk = Gain to Loss Ratio = 1.11
Medium Term Chart: