AUD/JPY Turns Lower At The Top Of Its Range
City Index | Apr 08, 2019 08:03
Since the end of January, AUD/JPY has traded in a sideways range between 77.44 – 79.84. It’s unclear at this stage which side it will eventually break out of but, we see potential for AUD/JPY to trade lower from the highs of its range.
Indeed, it appears to have favoured traders who sold near the highs or bought near the lows of the range, and with prices now trading lower, it appears this pattern intends to hold.
Interestingly, AUD/JPY has hit resistance at the top of its range just as the US10Y and US2Y have hit resistance levels. Given they both remain within a downtrend and, like AUD/JPY, are considered a barometer of risk, then we see potential for sentiment to turn lower. That said, if we see US yields break higher then it leaves the potential for AUD/JPY to also break higher in tandem and out of rage. Therefore, it could pay to watch yields in tandem with AUD/JPY at this potentially pivotal moment for risk.
AUD/JPY is currently trading lower for the session after printing a bearish pinbar on Friday. Furthermore, the stochastic oscillator is overbought territory and on the verge of providing a bearish sell-signal. With the market ranging, conditions are ideal for oscillators which tend to provide more false signals during a strong trend. If the range holds and sentiment turns lower, we could well see AUD/JPY head back towards the February lows. Bears could look to fade into any retracement below 79.26 (Friday’s low) for a more attractive entry level. However, given the range is around 240 pips, it could also serve well to trade from the daily chart.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
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Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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