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Happy new year, forex friends! I’m starting 2016 off by revisiting my recent AUD/JPY short trade setup which still seems to be valid. You see, I decided to close my position on this one before the end of 2015 to avoid any exposure to event risks while I’m out enjoying the holidays.

With all the downbeat reports coming out of China and speculations of further PBOC easing, I think this pair might still have room to fall further. To top it off, the expiration of the short-selling ban on Chinese securities later this week could also spur another leg lower for equities, which might weigh on overall risk appetite.

AUD/JPY 4-hour Forex Chart
AUD/JPY 4-hour Forex Chart

As you can see from the pair’s 4-hour forex chart above, price also seems to have broken below the neckline of the head and shoulders reversal pattern. This adds confirmation that a longer-term decline is underway, possibly taking AUD/JPY down by an additional 400 pips or the same height as the chart formation.

I was able to enter at market (86.00) just below the neckline at 86.50, with a stop just past the right shoulder at 89.00 and an initial profit target at the 83.00 major psychological mark. I risked 0.5% of my account on this position so make sure you read our risk disclosure if you’re looking to hop in with me.

What do you guys think of this setup? As always I’d love to get your feedback on my ideas!


Happy time

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