Potential signal:
- Buying this pair at the 50-day EMA, roughly 112.70 on a dip, with a stop at 112, and a target of 114.
The Aussie dollar initially rallied during trading on Tuesday but continues to see worries about the potential of intervention by the Bank of Japan and others.
AUD/JPY
The Aussie dollar initially rallied during trading on Tuesday but gave back gains rather quickly as we continue to see a lot of noisy trading in general. With this being the case, I suspect you have a situation where, although positive, there are a lot of concerns out there about the Bank of Japan possibly intervening again, and the Americans helping them last time I think really spooked the markets.
Ironically, it had nothing to do with the Australian dollar, but there’s that concern about the strengthening yen in general. This is a market that’s been somewhat range-bound for a while between the 110 yen level on the bottom and the 115 yen level on the top.
Consolidation and Intervention Concerns
As we approach 113.50 yen, it makes sense that maybe there’s a little hesitation here. From a purely technical analysis standpoint, this is a market that’s just above fair value in the consolidation that we have been in since March, and that is something that might be worth watching as well.
Overall, I do think this is a situation where traders will continue to look at this in terms of the probabilities of a Bank of Japan intervention more than anything else. The interest rate differential does pay you to hang on to this, and I do think that the 115 yen level makes for a nice, juicy target for bullish traders.
So, I’m still short the yen in multiple currencies; full disclosure: not this particular one, but this is yet another opportunity to take advantage of a dip from what I see. This is still a bullish market, despite the concerns.
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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
