The Aussie has some top tier events around the corner and this range setup on AUD/JPY is a great way to play my fundie short bias.
Range Resistance on AUD/JPY
Next week, we’ve got a couple of top tier events from Australia that are likely to get action going: the latest RBA interest rate statement and the quarterly Australian GDP update. It’s likely though that the RBA’s interest rate statement will be the main focus given the speculation that we may see two to four rate cuts in the next couple of years, but the GDP update could certainly prompt traders to make moves as well.
With the calls for the interest rate to fall and the latest economic sentiment data backing that call up, I’m bearish on the Aussie, but after the beat down its taken over the last month or so, I’m not so eager to jump in short at current levels. I’m looking for a bounce to get in at a better price, and I think AUD/JPY presents a great opportunity for that.
The pair has been in a range over the last couple of weeks with strong resistance around the 76.00 – 76.20. I’m looking to short there if the market makes it up there next week, and if the RBA or GDP events don’t give us a positive surprise, I’ll look to scale into a short position from there. My max stop will be the weekly ATR, and for my max target, I’ll start with a 2x weekly ATR but likely adjust that depending on what we get from next week’s events. Here’s what I’m going to do:
Short AUD/JPY with 0.50% risk at 76.30, max stop at 78.10, max target at 72.70
I’m only risking 0.50% of my account on this trade because of the RBA event ahead, and I’ve got a potential max return-on-risk of 2:1. If triggered and everything lines up for downside momentum then I’ll look to add further to get up to my max risk of 1.00%. If the fundie or geopolitical picture shifts in a way that doesn’t line up with a short position, then I’ll cut my orders/trade quickly. What do you guys think? Let me know in the comments section below!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.