AUD/JPY: Swing trade short below historical resistance zone
A 2-bar bearish reversal pattern has formed at a historical resistance zone just below 96. Prior breaks above it in June and September failed last year. On both occasions the market fell near the 91 area before retesting the resistance zone, and in October we saw prices accelerate lower.
What could trigger such a move this time around? Whilst nobody is expecting the BOJ to change policy tomorrow, that doesn’t mean we shouldn’t disregard its potential. And that would likely be a very strong reaction for the yen to send AUD/JPY lower. However, a more likely scenario is that the BOJ upgrade their inflation forecasts, and that could prompt some speculation that the BOJ are closer to widening their YCC (yield curve control) band or removing it al together. Of course, a bout of risk off is usually always bearish for AUD/USD.
Either way, the bias remains bearish beneath Tuesday’s high, and the initial target is the lows just above 93.27.
What could trigger such a move this time around? Whilst nobody is expecting the BOJ to change policy tomorrow, that doesn’t mean we shouldn’t disregard its potential. And that would likely be a very strong reaction for the yen to send AUD/JPY lower. However, a more likely scenario is that the BOJ upgrade their inflation forecasts, and that could prompt some speculation that the BOJ are closer to widening their YCC (yield curve control) band or removing it al together. Of course, a bout of risk off is usually always bearish for AUD/USD.
Either way, the bias remains bearish beneath Tuesday’s high, and the initial target is the lows just above 93.27.
Trade closed: target reached:
The Nikkei newspaper reported that the BOJ were going to discuss tweaking YCC at Friday's meeting, sending the yen broadly higher and AUD/JPY lower to our target.
