The Land Down Under just printed a dismal employment report, so I’m looking at this reversal pattern on AUD/JPY.
Think we’ll see a strong selloff next?
This pair appears to have broken below the neckline of its head and shoulders formation on the 4-hour time frame.
Will a reversal follow from here?Technical indicators are suggesting that buyers might still have some energy left, as the 100 SMA is above the 200 SMA while Stochastic looks ready to pull up.
In addition, the gap between the moving averages is widening to reflect strengthening bullish momentum.
However, the freshly-released Australian employment report hints that AUD could be in for a drop. The economy lost 30.6K jobs last month instead of showing the projected 17.5K increase.Risk-off flows stemming from the conflict between Israel and Palestine could also spur a flight to safety, which typically benefits the lower-yielding Japanese yen.
I’m waiting on this pair to break below the 200 SMA dynamic inflection point as additional confirmation that sellers are taking over. This could take AUD/JPY down by the same height as the chart pattern or roughly 150 pips!
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