AUD/JPY: Will We Break Out The Range?

Published date: 25/03/2019
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Happy Monday everyone! So what do we have in store for AUD/JPY this week...

As we edge closer to month close we can see our monthly candlestick beginning to take shape, providing a more conclusive directional indicator (bearish). This was thanks to last Friday's bearish leg that was experienced across Yen crosses. For this pair, in particular, we were able to print a shooting star on the weekly after failure for price action to sustain above our moving averages which have quite noticeably become a reoccurring pattern for the last 16 weeks. Seeing this on a higher timeframe would cause one to think that unless we experience an extraordinary surge of bullish momentum our mid to longer-term outlook on this pair would be further weakness taking us toward prior significant lows.

On the daily, it has become more apparent that we are currently trapped within a 200 PIP range since January. Friday's closure was a Marabozu type candle which came into fruition after a downside moving average crossover. Today we have spiked through a prominent liquidity region which has acted as strong support over the last few months (indicated by wick rejections and failed body closures). 

Zooming into the H4, we are currently experiencing a retracement which could continue to the 78.700 region if we are able to surpass minor resistance at 78.400 which layers well with our moving average. If the highlighted resistance reason is able to hold we could experience a possible short back to the edge of the highlighted range.

With price having already reversing around 70 PIPs from our liquidity region since market open it would not be advisable to enter any setup until price finds its way back to a significant key level where a reversal can occur. If price happens to breakout beyond 78.700, with only 80 PIPs distance to the upside border of our range, any bullish setups would require an aggressive entry to maximise the risk/reward profile of the trade.


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