Remember that AUD/JPY traded at 75.00 last month and is now 20% higher; surely it’s possible that we get a move back towards more ‘neutral’ levels around 84?
- ASX shares are down whereas Dow Jones is up (thanks Joe) as foreign investment funds book profit on their share trades and take advantage of the high AUD/USD to book even more profits
- Rumours of some big AUD selling later tonight (usually there’s some fire when there’s smoke) although the bank research doesn’t agree with the rumour (no trade idea can be perfect)
- Well informed traders have been booking a lot of profits from AUD longs over the last few days
- Quality research suggesting some large USD/JPY selling later tonight
- Strengthening resistance in the AUD/USD ahead of 1.0950
Given what we know so far, I would suggest looking for an entry level to sell AUD/JPY in the hope of a sharp retracement. There are a lot of ‘ifs’ here; if AUD/USD consolidates below 1.0950, if USD/JPY rallies back towards 82.25ish, then that would put AUD/JPY back towards 90.00 which was the high a few weeks ago. That raises the possibility of a double-top forming on the daily chart so sell that rally with a tight stop looking for a move back towards 84.00. With a risk-reward ratio of 1:12, it sure makes sense to me.
