Here’s another potential retracement scenario that I spotted! What do you think of this forex setup on AUD/JPY?
As you can see on the pair’s 4-hour time frame, price is moving above a rising trend line which indicates that there’s an ongoing uptrend. AUD/JPY recently broke above the 94.00 major psychological resistance, suggesting that there’s still strong upside momentum.
The pair found a bit of resistance near 96.00 so there might be a small forex correction ready to take place. In this case, AUD/JPY might pull back to the Fibs or the 94.00 former resistance between the 38.2% and 50% levels. Stochastic is already indicating oversold conditions, which means that Aussie bulls are ready to charge.
Fundamentals seem to favor the Australian dollar over the Japanese yen in the longer-term, as the RBA isn’t looking to cut interest rates anymore. On the other hand, the BOJ has mentioned that it is ready to add stimulus if the recent sales tax hike ends up hurting spending and overall economic performance.
I haven’t set any forex entry orders yet as I plan to wait for more confirmation once price starts pulling back to the Fib levels and trend line. I’m thinking of going long around the 94.00 level with a stop below the 61.8% Fib and a target around the previous highs of 96.00.
What do you guys think? The setup’s somewhat similar to my latest NZD/CHF trade, which turned out quite well, so I’m hoping this would work out too!
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