Forex Watchlist: AUD/JPY Aiming for Channel Resistance?

The risk-on vibes could keep boosting the higher-yielding Aussie this week, but I still gotta keep my eye on the scheduled economic catalysts from the Land Down Under. For one, we’ve got the RBA August meeting minutes lined up and this should provide clues on future policy decisions.

I’m looking at this symmetrical triangle that’s forming on the pair’s 4-hour forex time frame, as price is currently testing the support around 77.50. Dovish rhetoric from RBA policymakers and indications that they’re open to further rate cuts could trigger a breakdown while hints that they’re inclined to stay on hold for the rest of the year could spark a bounce.

AUD/JPY Trade Idea

AUD/JPY 1-hour Forex Chart

AUD/JPY 4-hour Forex Chart

I’ll probably wait for the minutes to be released to see the initial market reaction before taking any trades. If I’m able to hop in a long position, I’ll aim for the top of the long-term channel around the 80.00 handle but I’ll move my stop to entry once price tests the short-term triangle resistance at 79.50.

AUD/JPY Daily Forex Chart

AUD/JPY Daily Forex Chart

As for the Japanese yen, I’m thinking that the currency could be in for a bit of weakness in the next few days due to Japan’s downbeat GDP release and the presence of risk-taking. Over the weekend, Japan printed a flat GDP reading instead of the projected 0.2% expansion for Q2.

Other event risks for this setup include the Australian jobs release, which is expected to show higher employment gains of 10.2K in July compared to the previous 7.9K gain. I’ll keep you posted if I do take this trade so make sure you’re following me on my Twitter account!

As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.

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