The Australian dollar daily chart displays the key respect of the bearish Gartley pattern that formed at the beginning of the month. On December 4th, price formed the reversal pattern and respected the 200-day SMA. Point D was confirmed with both the 78.6% Fibonacci retracement of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move.
Last week, price had its first daily close in months below the 200-, 100-, and 50-day SMA(s). If bearish momentum persists, we could see price target both the trendline starting back on September 4th and the psychological 86.00 handle. If we see a daily close below that key support region, bearishness may continue towards the 2015 low region of 82.00. Major support may come from the 80.00 handle.
If the Australian economy shows signs of improvement, the RBA may still be on hold until 2017 and we may fade any major Aussie rallies. If we see a return to the upside, initial resistance may come from the 50-day SMA, which currently trades at the 87.62 level. Major resistance may come from the psychological 90.00 handle.
The trade: Sell AUD/JPY at 87.25, with a stop loss at 87.75 and take profit at 85.75. The risk/reward ratio is 1:3