Welcome to mid-week trading, errbody!
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Pullback alert! AUD/JPY dropped like a rock late last week, which was enough to send the Aussie below AUD/JPY’s rising wedge support on the daily time frame.
Are we seeing a longer-term reversal for AUD/JPY?
Market bears who believe that the Aussie is about to lose more pips on the yen can take advantage of the pullback to the 83.50 zone, which lines up with a 38.2% Fib retracement and the 100 SMA on the daily.
If you’d rather wait for higher entry prices, however, then you can wait for AUD/JPY to hit the higher Fib levels or the broken wedge support before placing them short orders.
Think AUD/JPY will extend its uptrend instead? Wait for AUD/JPY to trade (and stay!) above the 100 SMA and maybe AUD/JPY will head back to its 2021 highs.
Can’t get enough of Fib trades? I gotchu!
The euro is having trouble making new Q2 2021 highs against the Aussie, which isn’t surprising because EUR/AUD just hit the 38.2% Fib retracement of the downswing that we saw from late 2020 to early 2021.
It also doesn’t help that there’s a tiny bearish divergence and 200 SMA ceiling on the daily.
Will EUR/AUD’s 1.5800 – 1.5850 zone hold as resistance? Shorting at the first signs of bearish momentum would yield a good risk ratio especially if you place your stops just above the 200 SMA and target EUR/AUD’s 2021 lows.
Just remember to keep wide stops! Currency crosses like EUR/AUD can see tons of volatility in a day. You wouldn’t want to get stopped out before the pair moves in your direction, would you?