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So I couldn’t get the ideal pullback that I wanted on AUD/JPY, but I’m seeing another chance to buy on a dip right now! Think I should jump in?

Long AUD/JPY Idea

On the pair’s 4-hour time frame, the rising channel is still intact and price is hovering around support once more. The pair is also trading safely above the inverse head and shoulders neckline on its daily time frame, suggesting that the reversal could carry on.

AUD/JPY 4-hour Forex Chart
AUD/JPY 4-hour Forex Chart

I was waiting to go long around the 88.00-88.25 area but I had second thoughts when the Australian CPI reading came in weaker than expected. Import prices also fell short of consensus, signaling lower price pressures down the line and possibly preventing the RBA from hiking interest rates anytime soon.

However, commodity currencies are still looking pretty strong as risk appetite might be poised to return to the markets after yesterday’s profit-taking moves. I’m also keeping any eye out for the reports from Japan in today’s Asian session as weak inflation and spending figures could spur another round of yen selling.

I’m also keeping tabs on dollar price action and global bond yields as these appear to be influencing yen movements as well. Before the week comes to a close, we’ll see the U.S. advanced GDP reading and a strong result could revive tightening expectations, which might lead traders to dump the yen in favor of the dollar.

Here’s my plan:

Long AUD/JPY at 88.50, stop loss at 86.75, initial PT at 90.75 for a potential 1.28-to-1 R:R. 

Let me know what you think of this setup!

Cheers,

Happy

See also: Q2 2017 Trading Performance Review

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