Looks like this beautiful day trade was just not meant to be.
Rather than rallying to the WO/PWH resistance zone, AUD/JPY just spent the day trading sideways like a crab! Total bummer, dude!
I was actually quite surprised with how the yen traded yesterday because rather than weakening ahead of today’s monetary policy meeting, it beefed up!
Over the past two weeks, it had been weakening on expectations of a big increase in stimulus from the BOJ. But yesterday was different.
Apparently, BOJ Governor Masaaki Shirakawa’s recent remarks on the dangers of keeping monetary policy too loose led a handful of traders to believe that we might just see a small increase in stimulus today.
To learn more about it, I suggest y’all check out my buddy Pip Diddy’s daily forex fundamentals!
Anyway, this seemed to scare more than a few yen bears away, and it ultimately kept AUD/JPY from hitting my entry zone. Since I don’t wanna expose myself to unnecessary risk (who knows what the BOJ will do!), I’m canceling my orders for now.
But wait! That doesn’t mean I’m totally abandoning this setup. I mean, c’mon, it’s a wicked sick range!
If today’s monetary policy statement doesn’t result in a violent breakout, and price finds itself testing the resistance zone that I pointed out, I may just short this pair.
For now, though, I’m gonna sit on the sidelines and see how all of this unfolds. Hopefully, we’ll get a trade out of AUD/JPY! Stay tuned, fellas!
First off, I gotta give credit where credit is due. I wouldn’t have spotted this setup without the help of Big Pippin, who pointed it out in his Daily Chart Art. Thanks, brotha! I owe you! I might even let you beat me in a game of Madden! Ha!
Anyway, let’s move on to more important stuff… like this range on AUD/JPY! The pair has been trading within a range of just over 150 pips the past two weeks now. After bouncing off support at the previous week’s low (PWL), the pair is now edging its way back up the charts. Will resistance at the top of the range hold?
I don’t know for sure, but I’m willing to put some money on it! Not only is this the top of the range, but it also lines up with the weekly open, so I think we could see a lot of selling interest in that area.
My major concern though is that the Bank of Japan will be releasing its monetary policy statement tomorrow morning during the Tokyo session. Expectations are that the BOJ will be introducing additional quantitative easing measures into the market, which could really sink the yen.
With that in mind, I will be closing my trade before the end of today’s New York session. In the event I do not trigger, I will simply cancel my orders. No need to take any additional risks!
Here’s my gameplan:
Short AUD/JPY at 84.60, stop at 85.10, take profit at 83.00.
Even if the price doesn’t hit my ultimate take profit target, I think I’ll end up with a ratio greater than 1:1.
Lastly, since this is a day trade, I’ll be risking just 0.50% of my account on the trade.
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