AUDJPY: Approaching a key level of resistance on the Daily ChartGREETINGS
So the AUDJPY has been rallying from about 30 October 2020 from a low of about 73.250to the current 77.930 where we currently are. What is interesting about this pair is the level that we are now reaching. As depicted on the chart above a couple of things are now taking place, and i will clearly write them down in point form as become the style of my writing.
1. We have an ascending wedge (depicted in orange, for the benefit of newbies out there), that started from 30 October. Over the past couple of days the price continues to rise at a decreasing rate as compared to previous days, signifying a slow down in bullish momentum.
2. The ascending wedge pattern is also confirms the ever shrinking distance from point "A" to "B" to "C" to "D" signifying a potential downside break at point "D" which is also our Area of Key resistance.
3. The approaching area of key resistance which was formed around 1 Sept 2020 at price level 78.200ish is the level to watch out for. If price reaches this area we expect to retrace downwards. if we break beyond this point then we can expect take the hit and place a buy order instead.
4. Volumes show that bulls were pushing the market from around 27 November and peaked around 4 November, after that they are now decreasing at an increasing rate spelling the introduction of the bears.
5. The upcoming economic data out of Japan on the 10 December 2020 will definitely bring about some volatility and that could be the catalyst to our break to the downside.
TECHNICAL INDICATORS
The RSI and Stochastic are currently "neutral", but are fast approaching the "overbought region"
All Moving averages are screaming "buy", but this will be short-lived in a few days.
Fibonacci pivots are all in the late 70's
CONCLUSION
This pair is poised for a nice reversal around the 78.200ish area. a sell limit order should be placed, with a profit target of 76.450 and possibly even further down to 74.350
Secondly there is the correlation aspect to this pair. The AUDSGD, AUDUSD and the NZDJPY are all very positively correlated so the moment the above analysis is confirmed a Sell Stop order can be placed anywhere on those above pairs and ride the elevator of profits going down as well (given these pairs do not react to other news events). On the converse side the USDPLN is negatively correlated thus bringing in hedging potential to this trade
Takunda Mudenge is a market analyst based in Zimbabwe, Africa. The above should not be construed, assumed or viewed as investment advise, but rather for educational and entertainment purposes only. For investment advise please approach a qualified professional.
