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After a lot of sideways action, AUD/JPY seems to be starting a new leg higher in my favor. Here’s a quick adjustment to maximize my potential gains and reduce my risk.

Symmetrical Triangle Break on AUD/JPY?

AUD/JPY 4-Hour Forex Chart
AUD/JPY 4-Hour Forex Chart

At the end of June, I decided to go long AUD/JPY after it broke classic symmetrical triangle pattern, playing my fundamental bias favoring the Aussie over the Japanese yen. In a nutshell, I thought that with Australia putting up better-than-expected economic updates while Japan disappointed with theirs, there would be underlying support for AUD/JPY for the time being. I also thought broad risk sentiment would stay more positive seeing as how rising COVID-19 cases couldn’t unhinge the “reopening trade.”

Since then, the pair has been in a sideways market (as with most forex pairs), but we’ve recently started to see buying support over the past week. In fact, the pair is starting to break above the strong resistance area around 75.20, which may draw in some technical buying if that break does hold.

Looking forward, we don’t have major economic catalysts ahead, so I think the markets will continue to focus more on COVID-19 vaccine/therapy news rather than the case counts. It’s also possible that if we get a recovery fund agreement in the EU and another round of stimulus from the U.S., traders could get bullish on risk further.

So with the risk leaning more towards positive ahead, I decided to add to my position and roll up my stop, increasing my potential max gain while reducing my max risk. Here’s what I did:

Increased position size by 50%. Rolled stop higher to 74.55. 

This adjustment reduced my max risk from 1.00% down to 0.13%. My new potential max gain at my target of 80.00 is 3.09% or 3:1 return on my original 1% risk.

Be sure to manage your risk and avoid overexposure.

What do you guys and gals think? Are you expecting traders to continue to push the pair higher? Or is this a fake upside breakout in the works? 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.