With the Australian dollar dependent on the US-China trade relations, it is still vulnerable to speculation. When you compare the pairs AUD/USD and USD/JPY, you can see weakness in the Aussie at a technical level and also potential strength in the Japanese Yen especially as it is a risk currency, with investors flooding to it in times of uncertainty.

The logical pairing to look for potential trade set ups is AUD/JPY, assuming we see the JPY strength.

The daily chart is in a range, this is confirmed by the market testing both support and resistance levels twice and also by using the secondary indicator, the slow stochastic.

181126 AUDJPY Daily Range

181126 AUDJPY Daily Range

Resistance: 82.49 & 83.02
Support: 79.05 & 78.58

Every time the market tests support the slow stochastic is oversold and creates a buy signal by crossing. The opposite also occurs at the top of the range where the slow stochastic is over bought and crosses.

Currently the slow stochastic has been over bought and crossed whilst the market was at resistance. We should expect this market to sell off to the bottom of the range.

Trade AUD/JPY

When trading AUD/JPY, look at the support level 79.05 as a potential target zone. Target orders should be placed above support levels to make sure the order is triggered.

The safest stop loss is above the 83.02 level. Should the market break through that level you do not want to be short. Ideally, you would wait the market to get closer to resistance to give yourself a better risk to reward ratio. The current level would be above a 1:1 ratio and so is an acceptable to sell although do not be surprised to go offside.

 

 

Disclaimer: This should not be used as investment advice and is only an opinion. Do your own research before looking to risk your own capital in the financial markets.


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