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I’m totally digging this AUD/JPY break-and-retest forex setup that Big Pippin shared earlier, and I think that fundamentals also favor a long trade. Here’s my short-term trade idea.

AUD/JPY 1-hour Forex Chart
AUD/JPY 1-hour Forex Chart

It seems that China’s stronger-than-expected HSBC flash manufacturing PMI was enough to usher risk appetite back in the financial markets, as the reading indicated a return to industry expansion. This Aussie got a pretty strong boost since a pickup in demand from China would mean better prospects for the Land Down Under’s raw material exports.

At the same time, the Japanese yen is under a bit of selling pressure, as forex traders are anticipating another round of weak inflation and spending figures from Japan. The country is set to print its national core CPI tomorrow and possibly show another decline. Household spending and retail sales data are also projected to show sharper downturns, prompting speculations of another round of easing from the BOJ.

With that, I’m looking to buy AUD/JPY around the 93.00-93.50 levels since these line up with an area of interest. Stochastic is already in the oversold zone, which means that Aussie bulls could push price back up once more, but I’m worried that today’s weaker-than-expected release of the Australian private capital expenditure report is still weighing the pair down.

Here’s my plan:

Long AUD/JPY around 93.00-93.50, 150-pip stop loss, profit target at 95.00.

I’ll be risking 1% of my account on this trade so make sure you read our risk disclosure if you’re thinking of taking the same setup.


Happy time

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