I guess you could substitute some of the other JPY crosses for this trade
- The AUD/JPY market is still sitting very long and has not yet started serious liquidation
- The rate hiking cycle in Australia has probably paused
- The real-money turnover in USD/JPY is still selling with buying coming from speculative USD bulls
- AUD/USD has broken down technically
- AUD/JPY has achieved its technical objective of rallying 61.8% of the 104.45/55.10 fall; this level was at 85.50
- Gold is starting to trade like it has put in a major top
- Government stimulus spending is starting to wind down, not only in Australia but also in other major economies. This might send us right back to where we were 12 months ago.
- Australia never really suffered a major shock like other economies did. It could be more susceptible than most if another downturn occurs
- The AUD has a lot of things going for it but it is overvalued at current levels
This is a long term trade from my perspective. I have sold this morning at 79.80 and I will look to build a significant short position over the coming days/weeks, reducing or increasing risk depending on the levels. I will trade an initial 76.50/81.50 range and I expect this pair to fall to at least 65 over the next few months.
Well you gotta have a view! (Once again I reiterate that this is my view only. I get as many wrong as I do right. I am a medium to long term trader and I will trade a particular strategy for months on end. Don’t blindly follow what other traders say but add their views into the equation before you take your own trading decisions)
