AUD JPY Technical Update For W/C 6th February 2012

AUD JPY Technical Update For W/C 6th February 2012

Unlike the previously discussed GBP CAD, if there is one FX pair that has precisely followed my road map over the last 6 Weeks it’s this one.

From the rally up to the Daily Triangle and the retrace down to the combined 200 MA and old fib level support followed by continuation of the rally back up to the triangle resistance, AUD:JPY moved beautifully and exactly as suggested. Yet I’ve stillnot taken a trade!

We’ve come to a point where planning the next move isn’t quite so obvious. It’s now time for the Market to tell us where it wants to go, but the charts do hold some clues.

Firstly looking at the Hourly chart, the bull flag formation was something I’d been watching in preparation of posting  the analysis here ahead of a break out. However, that break out happened sooner than I’d allowed for and I didn’t get the opportunity to buy the break. So the next step will be to wait for a pull back that should re-test the trading range prior to the break out, support in the region of the small red horizontal line could be an attractive long entry if other time frames and MACD confirm the move.

In regards to MACD, note how it’s formed a higher high whilst price at this stage has formed a lower high. This can often signify an increase in buying momentum and usually points to higher price highs ahead:

Moving out to the Daily chart and we can clearly see that Friday’s high was rejected by that Triangle resistance. If we break out of the triangle, we almost certainly have a continuation of the current rally on our hands. If price pulls back as would be ideal from the hourly chart above, then any 3rd run towards this triangle is almost certainly going to break out and target resistance in the 84.35 region. Stop loss could potentially be place in the 80.50 area but ideally I’d like to use smaller time frames to determine a tighter stop loss depending on how things look at the time of trade entry:

In conclusion, price is currently at technical resistance so the current price level is not the safest of entries for a long position, but it does appear that technical’s continue to favour the upside overall and therefore I’m not looking to short this resistance, but rather buy a retrace and manage the trade accordingly. Below 80.50 and the bullish idea is scrapped.

My view on longer time frames still remains the same as the previous AUD:JPY analysis which can be found here.

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  • RS2OOO
    Posted at 17:51h, 07 February

    I was so close to entering long last night but decided I’d be better off entering on a confirmed break of the triangle so eventually settled on setting an overnight limit order.

    The order was triggered, however, because it triggered on a data spike the position was subject to some slippage (20 points or so) and I’ve ended up with an entry of 82.83

    Because of this entry I’m not as comfortable with short term risk/reward so will be watching the trade closely and probably wont allow it to go into a loss on the basis I should be able to re-enter at better levels on a pull back or break out back test.

  • RS2OOO
    Posted at 19:11h, 07 February

    Decided to close AUD:JPY

    Just not happy with my entry. Closed at 82.93 for a 10 pip profit.

    Will also remove this trade from the swing trading log as it’s not really a swing trade just yet.

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