12/20/2006 – 8:15 am EST
Well, it looks like this pair has continued to rise and avoided our short entry orders. Technically, the pair has risen outside of the channel and into the 61% Fib extension line at 92.70. Stochastics and RSI are still screaming overbought on the daily chart, but I added the MACD which is telling me we have a little more to go. Fundamentally, the Aussie dollar has been supported by strong fundamentals and a recent rise in commodities, especially oil and gold. The Bank of Japan has skipped the rate hike and left us with “moderate” growth rhetoric. So, I see this pair traveling another 100 pips at least before we see a reversal.
We will keep a close eye out on AUDJPY, if does reverse we could see a move all the way down to 90.00 to 90.50 before the long term trend resumes. For now, we will remove our entry orders and look elsewhere for a new trading opportunity.
12/14/2006 – 11:40 pm EST
It looks like AUD is losing steam against the Yen, so it’s time to prepare for a short trade in AUD/JPY. I like a short trade for several reasons. Technically, the stochastics and RSI indicators are in overbought territory and are starting to look like we may see a pull back out of that area. Also, we are starting to see stalling price action at top of the channel drawn on the daily chart.
We examine the sentiment change in both currencies when we take a look at the Commitment of Traders report from 12/05/2006. Net positions from Non-commercial traders changed net -4,447 contracts from the previous week for the Australian dollar and net +18,421 contracts for the Yen.
The only X factor is the BOJ’s rate decision next week. Recent Japanese data has not supported a rate hike, but we just saw the Tankan report better than previous numbers. This may not matter as traders may focus on the speculation that future survey reports are projected to be lower.
If the pair trades lower than the previous day’s low, we will go short and use the previous day’s high as a stop level.
Short 1 lot AUD/JPY at 91.80, stop at 92.55, pt1 at 91.10, pt2 at 90.00
Please remember to never risk more than 1% to 2% of your account on any one trade. Adjust your position sizes to this rule accordingly. Good luck and good trading!