With economic events up ahead from Australia, China and Japan ahead, will the consolidation on AUD/JPY finally turn into a breakout?
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD ahead of German & U.S. data, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:
Japan Unemployment rate at 11:30 pm GMT
Japan Industrial Production at 11:50 pm GMT
China Services PMI at 1:00 am GMT (July 31)
Australia PPI, Private Sector Credit at 1:30 am GMT (July 31)
Japan Consumer Confidence, Housing Starts at 5:00 am GMT (July 31)
What to Watch: AUD/JPY
It’s been a sleepy market for AUD/JPY over the past few sessions, prompting price action to form a consolidation pattern on the one hour chart above. But we could be in for a breakout as risk sentiment flips negative on the session, enough to start to push AUD/JPY below the bottom of the range.
For the bears out there, if we see negative Australia / China economic updates come out weaker-than-expected, not only culd that put pressure on the Aussie, but also add to negative global risk sentiment which would likely support the Japanese yen.
With a stop above the consolidation range and target around the a daily ATR of around 70 pips, you’ve got a decent short-term potential return-on-risk, as well as a potential swing trade setup. That consolidation break could draw in longer-term traders and create momentum lower if risk sentiment stays negative.
For the bulls, it’ll likely take a combination of both better-than-expected Australian / Chinese data and positive global risk sentiment to draw in buyers on the pair. If that scenario plays out, then watch out for a sustained break above the consolidation area before considering a long position.
Or if the pair is able to sustain above the 75.00 handle before the events, consider a long position at the market if we see positive data from that part of the world.