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Plenty of trends formed in recent sessions, but for this week, I’m going to focus on the bounce in AUD/JPY. Will this week’s events get me in at a better price to play the downtrend?

AUD/JPY Downtrend Fib Pullback

AUD/JPY 1-Hour
AUD/JPY 1-Hour

Which events am I talking about?  The main one on the forex calendar this week to look at is the upcoming Australian Jobs report for July. Read the article linked if you want more details from my main man Forex Gump, but in short, leading indicators point to a likely positive headline jobs growth number, which is likely to give the Aussie a short-term pop off the data. But as with the last event, we could see wage data and balance between full-time vs. part-time jobs drag sentiment lower if weaker.

For the Japanese yen, no major data ahead but we did just get a very positive read on Japan’s second quarter GDP to help lift the mid-to-long term sentiment in the funding currency.

So, there’s a potential pop ahead for AUD/JPY, and if the market does get up to the Fibs, I’ll look short there as technical traders could be looking in that area to play the downtrend we’ve seen in the last couple of weeks.

My stop will be two times the daily ATR and well beyond the Fib retracement area, and I’ll have an initial target at the August low, where if tested, I’ll re-assess to potentially take profit or adjust to reduce risk and maximize gains. Here’s what I’m doing:

Short half position AUD/JPY at 86.90, max stop loss at 88.40, initial target at 84.40 for an initial 1:1 return-on-risk potential.

I’ll be risking only 0.5% of my account on this position and again, I may potentially try to maximize my gain depending on what the market stories are if AUD/JPY gets down to my initial target.

As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.