Trade Watchlist: AUD/JPY Downside Break?

National Financial Solution > Forex Trading > Trade Watchlist: AUD/JPY Downside Break?

AUD/JPY just broke a minor support pattern and may be on the verge of breaking a bigger one. Is a swing move to the downside in the cards?

AUD/JPY Downside Break?

AUD/JPY 4-Hour Forex Chart
AUD/JPY 4-Hour Forex Chart

We’ve got a potential fresh swing move in AUD/JPY forming as the pair seems to be set on making a new move lower. The strong area of interest around 84.35 handle seems to have given way to the bears, who are now pushing the market lower to the rising ‘lows’ pattern seen on the four hour chart above. Will the pattern break and bring in the momentum sellers or will it hold?

Well, with recent consumer data from Australia disappointing (e.g., Australia’s consumer sentiment pulls backAustralia Q1 wage growth dragged by public sector) and the RBA likely to keep monetary policy easy for quite some time, the Aussie could move lower in the short-term if the upcoming Australian employment data disappoints this week.

The odds of this potential move increases if global risk sentiment continues to lean towards risk aversion, sentiment that has been dominant as inflation fears and rate hike speculation rises.

So, we’ll be on the lookout for a downside break of the rising ‘lows’ pattern on weak Australian employment data, and if the market holds below that pattern, it’s likely to draw in technical bears and possibly fundamental traders as well.

A fresh move from there could take the pair down to the strong support area around 82.50 and beyond over the next week or two if markets really start to turn red, making a short play an attractive one in terms of risk-to-reward if keeping a tight stop on the other side of the rising ‘lows’ pattern.

What do you guys think? Will AUD/JPY break to the downside with this week’s Aussie jobs data? Or is this a buying opportunity at the rising ‘lows’ pattern? 

Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.

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