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I may have been a tad early in going for a long position on this one, but I’m seeing more signs of potential upside. What do you guys think?

Long AUD/JPY Trade

You see, I hopped in a long position at market (86.00) when price seemed to be making a convincing bounce off the daily ascending channel support. Around that time, the RBA just finished making its monetary policy statement that turned out a bit more hawkish than expected.

AUD/JPY Daily Forex Chart
AUD/JPY Daily Forex Chart

I set my stop below the latest dips and the 84.00 handle while initially aiming for the mid-channel area of interest close to the 89.00 mark. If bullish momentum looks strong enough, I could adjust my target higher to the very top of the channel and trail my stop along the way.

I’m still feeling bullish about this pair, mainly because of the pickup in gold prices, which is partly spurred by stronger expectations for U.S. tax cuts that could be positive for business activity and demand. President Trump’s upcoming speech is expected to shore up confidence that tax reform could get done pronto, which might mean more dollar gains.

To top it off, a stronger dollar and rising U.S. bond yields are keeping a lid on yen gains. The upcoming FOMC statement does pose a huge event risk, though, as profit-taking and likely revisions in economic projections could push the dollar and the yen around.

I’ll also be staying on the lookout for Australia’s jobs figures due later in the week to see if strong data can sustain the rally. Medium-tier reports are suggesting a rebound for the Land Down Under, with the Westpac consumer sentiment index just posting a 3.6% jump after the earlier 1.7% drop.

Cheers,

Happy

See also: Q3 2017 Trading Performance Review

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