Daily U.S. Session Watchlist: AUD/JPY

Another round of market sourness and upcoming data from both Australia and Japan makes this simple pattern on AUD/JPY one to watch going into the final few sessions of the week.

Before moving on, ICYMI, we’ve started doing a Daily London Session Watch list! And today, we looked at an opportunity forming on GBP/CAD ahead of comments from BOC Governor Poloz, so be sure to check that out. For all you traders out there who trade the London session, be sure to check out the site daily for the latest news updates and pairs that could be on the move for the session!

Intermarket Snapshot

Fresh Market Headlines & Economic Data:

• U.S. existing home sales rise more than expected in October
• Philly Fed manufacturing index improves 5 points to 10.4 in November
• ADP Canada National Employment Report: Employment in Canada Decreased by 22,600 Jobs in October 2019
• Monetary conditions about right given the economic situation – Bank of Canada’s Poloz
• U.S. labor market slowing; manufacturing mired in weakness
• China says it will strive to reach ‘phase one’ trade deal with U.S
• China invites U.S. trade negotiators for new round of talks: WSJ
• October UK Public Sector Borrowing Hits Five-Year Monthly High
• UK’s Labour unveils ‘radical and ambitious’ plan to remake Britain
• UK budget deficit hits five-year high, before election give-aways
• ECB policymakers buried the hatchet at Draghi’s farewell meeting according to latest ECB Monetary policy meeting minutes

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

• ECB Guindos speech at 6:30 pm GMT
• Australia Manufacturing & Services PMI at 10:00 pm GMT
• Japan inflation rate at 11:30 pm GMT
• Japan Manufacturing & Services PMI at 12:30 am GMT (Nov. 22)

What to Watch: AUD/JPY

AUD/JPY 1-Hour Forex Chart

Once again, U.S.-China trade headlines shakes up market sentiment, today with a more risk-off lean, bringing us back to the pair that seems to be the most likley affected by risk sentiment / China-related geopolitical news: AUD/JPY. And with upcoming potential catalysts coming from business sentiment updates from both Australia and Japan ahead (as well as Japanese inflation data), the odds of getting some volatility from the FX markets are better with this pair.

From a technical standpoint, the pair is leaning into a slow trend lower on the one chart above, forming a strong pattern of lower ‘highs’ in the process. We can also see that in the short-term, the stochastic indicator has already signaled over bought conditions, raising the odds of the bulls running out of steam.

So if you’re a bear on the upcoming Aussie updates and/or potential geopolitical news catalysts, the current technical pattern works in your favor. And with a daily ATR of around 60 pips, a move lower to the next major psychological level (73.00) is a reachable one within the next session or two with the right catalysts, making for a good potential R:R if using a break of the falling ‘highs’ as a stop guide.

If you’re a bull on the Aussie and/or think we’ll get some positive commentary from China or the U.S. on the potential for a trade deal, look out for a break above the falling ‘highs’ before considering a long position.

The potential R:R on a short-term trade is not as great with the next potential resistance around 74.50, but if gunning for a swing position, it might be worth a shot if the bullish catalyst is strong and aiming for the next major psychological level of 75.00 and beyond.