The AUD/JPY daily chart displays consecutive lower highs and lower lows with a potential short setup to continue the visible falling trend (supported also by downward trendline). The current corrective phase seems to be running out of steam in initiation of a potential impulsive phase, with the production of a bearish reversal price bar:
- ricocheting off a previous level at ~95.20; - rejecting the 50% retracement level which is contiguous to 95.20; - bouncing off and (most likely) closing below the 50 ema; and - bumping into the falling trend line encountering resistance.
Convergence is observable on RSI and hidden divergence on Stochastic. Both Stochastic and RSI are in overbought territory and are ostensibly preparing for a reversal.
Entry - below the low of today's bearish reversal bar close Stop loss - above the high of today's bearish reversal bar close Target - first profit taking zone at previous low/swing low (91.75), and possibly lower at 91.00 if swing low violated
* Ignore the placement of the arrow indicating RSI convergence.
Are you looking to another short position as of right now?
I see a very strong reversal potential showing its face for the next week or so.
amanpaulbhogal
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Hey Nick,
Price is currently trading above weekly resistance (~100). It has also churned new highs. There is evident RSI divergence which supports the case for a potential pull back, given also the over extended price from the moving averages, where for me, ideally, a reasonable entry point to rejoin the trend would be either at the 20 ema or preferably the 50 ema for better profit potential. To trade short would mean the play out of this "expected" pull back with even clearer signs to be able to enter short. Now, although we have ourselves a bearish reversal bar, it isn't convincing enough for me to short this pair in a potential pull back. I'd like to see a clean high test bar/bearish pin bar candle to be able to do this. For all we know, since price has broken the 100 level, with today's bar which appears so far to be a low test shows a potential retest of 100 to continue long into ~104.30. Because JPY is incredibly weak, seasonally its pairs normally trade aggressively to the upside and often create shallow retracements. Hence, there are mixed signs. I've added an annotated weekly and daily chart to illustrate my thought process. Personally I would look for and stick to long opportunities with the trend on this one and every other JPY pair.
I'm afraid this may not have been of great help to you. BUT if AUD/JPY does enter corrective action, then I would trade short on the 60 minute or even the 15 minute timeframe to capitalise on larger reward:risk as follows, for which I'd have to see today's close as a high test. Still, this scenario, given the price oscillation during the duration of BOJ's QE stimulus programme, and presently, an encouragingly strengthening USD, for any JPY pair, if I would, I'd trade it in a very gingerly manner to the short side.
SensumCommunem
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Nice angle. I still having trouble with this pair. 5/12 Trend acted as a perfect support (near 93ish) and it gained more than 200 pips from close. Recently a resistance was violated and is resting above 200DMA (in my opinion the BEST entry point there is). Because of this I have a Long Bias, but if 200DMA is violated again, I'm positive we will see again a nice sell-off with a perfect Low Risk Entry Point
amanpaulbhogal
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Hey there. Thanks for your comment. Definitionally, by using only the moving averages, this pair isn't yet in a confirmed downtrend. However, personally, I've had a bearish bias on this pair on the daily chart just by noticing the structure of the highs and lows of price action and am waiting for the 50 ema to cross below the 200 ema to maintain this view. Nonetheless, from a weekly perspective, which is more far-seeing, there are hints of bullish bias as you've mentioned. The short trade on the daily chart hasn't triggered and price, today, has given a bullish reversal bar and broken above 95.20. If it closes above this level, I'll wait for price to get to ~96.20-96.40 and look for potential shorting signals. Happy trading. :)
amanpaulbhogal
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Basically, this is my current view.
SensumCommunem
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Yesterday's price action+MACD+RSI+Trendline convinced me to take a swing long trade.
amanpaulbhogal
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Good job. Now in a clear uptrend for me. Will look for long opportunity on the next higher low. Do you execute swing trades on lower time frames?
SensumCommunem
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No I prefer daily analysis in order to look at things more clearly and make a rational calm deciSion. I'm a momentum/position/swing trader
Are you looking to another short position as of right now?
I see a very strong reversal potential showing its face for the next week or so.