Last Friday, AUD/JPY reached that there ascending channel’s resistance at 87.00. And back then, I told those traders who were gangsta enough for a counter-trend trade to start lookin’ for opportunities to sell. Moreover, I also said (or wrote to be more exact) that if resistance holds, then them bears would be gunning for 86.20. Well, feast your eyes on that, dawg, since that’s exactly how it played out.
The pair hasn’t quite reached the channel’s support area, though, so the pair could still potentially go lower. However, 86.20 is a price area with significant market interest. In addition, stochastic is close to oversold territory. Furthermore, both moving averages appear to be acting as dynamic support. We therefore have lots of technical arguments for support to form here. Know what I’m sayin? Anyhow, just be ready to bail (or even switch to a bearish bias) if the pair smashes past 85.50, since that means that them bears are attempting a downside channel breakout. And if that does happen, they’ll likely be shooting for 84.70 next.
The last time we checked up on CAD/JPY was on January 25, which is last Wednesday. And back then, we found us a bullish flag when price was milling about below 86.70. Also, we wuz expecting to get 140 pips from the pair, should an upside breakout occur. However, I also told y’all to keep an eye on how price reacts to 87.20 and 87.60. As it turns out, them bears were waiting to gank them bulls at 87.60, since that price area acted as resistance. Still, y’all probably got between 90-120 pips, which ain’t that bad.
Anyhow, the pair has been pulling back after them bears gave them bulls a mighty good whuppin. So for today’s play, we’ve got us a Fibonacci retracement setup. And as y’all can see, price is fast approaching the 38.2% retracement level, which happens to line up with the area of interest at 86.70. Y’all may therefore wanna keep an eye on that. And all the more so, given that stochastic is already indicating oversold conditions and all that. If resistance does form there, then them bulls will likely be gunning for 88.30. Just remember to keep an eye on 87.20 and 87.60 agian. Also, there’s a small chance that the pair could go all the way down to the 86.00 major psychological level, which sits right smack on the 61.8% retracement level. A strong break past 86.00 could be a signal for a trend change, though. In any case, just make sure to practice proper risk management, a’ight?
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.