Happy Hump Day, yo! We’re all about the Aussie today, as we explore potential trade ideas on AUD/JPY and GBP/AUD. Which one will you most likely trade?
Triangle nerds huddle up! The 73.10 handle is doing a great job of keeping the bears at bay, which is made more interesting by the fact that AUD/JPY has been seeing lower highs since late last week.
Will the descending triangle that formed lead to a downside breakout this week? A quick look at AUD/JPY’s MarketMilk™ trend profile shows its 1-hour trends in bearish territory and its longer-term trend in “bullish but possibly weakening” status.
If the Aussie does break lower, then we can take cues from the School of Pipsology and aim for a move that’s as tall as the triangle’s base. That’s around 75 pips in this case!
Not convinced that the Aussie’s uptrend is over? You could buy at the 73.10 support and aim for an upside breakout (not all descending triangles break lower) and place your stops below this week’s lows.
Whichever bias you’re trading make sure you use extra wide stops when trading yen crosses like this one!
GBP/AUD looks set to see some retracement after hitting resistance just below the 1.9000 mark.
The 1.8650 is a good place to wait since it lines up with a 38.2% Fib retracement level AND the broken channel resistance on the 4-hour time frame.
If you also think that the pound is set to see some losses against the Aussie and you’re one of them countertrend traders, then you can short at current levels and bail at the first signs of bullish momentum.
Before you bet pips on a downside move for the pound, though, you should note that the current “retracement” doesn’t look like it has legs just yet. That means we could still see a shallower pullback before GBP/AUD makes new October highs!
If you’d rather trade with the trend and you’re not comfortable about waiting for the bottom of a retracement, then you can always jump in as soon as the pair clears the 1.9000 major psychological hurdle and makes new October highs.