Forex Trade Idea: AUD/JPY Reversal Pattern

While my short NZD/USD trade is still playing out, I decided to look for other forex setups on the comdoll pairs. I’ve been waiting for a chance to short the Australian dollar lately because the RBA just cut interest rates and the country printed a dismal jobs report for April.

AUD/JPY 1-hour Forex Chart

AUD/JPY 1-hour Forex Chart

I’m seeing this double top pattern just forming on AUD/JPY’s 1-hour forex chart, as the pair has been unable to break past the 96.00 major psychological level. Price is still making its way down to the neckline at the 94.00 handle and I’m considering hopping in a short trade in case a breakdown takes place.

Stochastic is already moving out of the oversold area, which means that a quick bounce might still be possible before the pair heads further south. There are no other economic reports lined up from both Australia and Japan in the next few days so I’m thinking that the recently released figures could continue to weigh on the pair.

Do you think I should wait for an actual breakdown though or would it make sense to enter around the current levels? As always, I’d love to get your feedback on my forex ideas!

Cheers,

Happy time

Other Popular Articles:   

Comdoll Trading Kit Forex Trade IdeaWhat is the STA strategy?Q1 2015 in Review

  • Jake

    Happy-pip, I am already in this trade, and I have moved my stop to break even ahead of AUD Monetary Policy statement and the CNY Trade Balance and CPI y/y figures out today.

    • Awesome! Where’s your profit target?

      • Jake

        93.50 down to the neckline of the double top. Then I will re-assess what to do when it gets there and lock in some profits, especially if it decides to not break below that level.

  • Soldierducky

    You got it wrong. It is very difficult to call a double top. A double top is only a double top if it passes down the support line. This is a simplified double top: http://www.forexhit.com/images/Double-Top.gif

    A correct double top looks like the pic attached. It happened recently on EURUSD. It MUST pierce through the support in order to call a double top

    The reason why it has to break is because if the there is a break failure and it bounces up it becomes another pattern. Very often it’s an ascending triangle and you will be in deep trouble for shorting. Only start the short after one candle closes BELOW the support line

    If you want to learn more, this is the best website to learn: http://thepatternsite.com/dtstudy.html

    There are many types of double tops. The one attached is known as a Eve and Eve double top. That is where the top is broad instead of being pointy. EE double top are one of the best performers.

    I highly suggest that during chart pattern (breakout) trading, always understand the pattern, wait for a breakout and do a confirmation and look for overhead resistance ( support) that way you can increase your probability of success

  • Pingback: Forex Trade Reviews: NZD/USD and AUD/JPY()

  • Pingback: Forex Trade Idea: Watching GBP/NZD's Channel()