Volatility picked up early to give risk aversion traders a solid start to the week.
We can see this play out in AUD/JPY as the pair pulled back on the session, bringing the market to technical levels to watch for several different short-term opportunities.
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
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What to Watch: AUD/JPY
On the one-hour chart above of AUD/JPY, we can see that the bulls have given the bears to start the new trading week, likely on a broad shift in global risk sentiment.
On the chart, we can see the market is testing the Fibonacci retracement area, which also lines up with the previous swing high around 79.80, which could now draw in buyers who look to trade the classic “resistance-turned-support” setup.
Stochastic is also signaling short-term oversold conditions, which raises the technical argument that could draw in more buyers than sellers short-term.
In that scenario, look out for bullish reversal patterns at the broken resistance area / Fibonacci retracement area for a potential short-term long position, or even a swing long position.
But if we do see a break below the Fibs and 80.00 major psychological handle, the move lower could pick up speed, especially if there are fundamental catalysts popping up to push traders to get more defensive this week.