Here is an update on our AUD/JPY short (sold at 80.25), as entered here.
The cross finally resumes recent down trend today by breaking 79.51 to as low as 79.05 so far. 79.16/22 cluster is already breached (61.8% projection of 83.92 to 79.69 from 81.78 at 79.16, 61.8% retracement of 72.39 to 90.29 at 79.22). But as noted before, we’d expect this cluster to be taken out with relative ease on current down side momentum, as seen in daily MACD.
The real test lies in 77.55/85 (61.8% projection of 90.29 to 80.48 from 83.92 at 77.85, 100% projection of 83.92 to 79.69 from 81.78 at 77.55). A way to trade this is to take profit at 78.00, slightly above this cluster. But we’d prefer not to rigidly do that but assess the downside momentum further.
We’re indeed looking at the prospect of deeper fall towards 72.39 low, as the rejection from falling 55 week EMA was rather bearish in medium term. The whole up trend from 72.39 (2016 low) should have completed at 90.29 (2017 high). Sustained break of 61.8% retracement of 72.39 to 90.29 at 79.22, which we anticipate, could pave the way to retest 72.39 low.
So now, we’ll hold AUD/JPY short (sold at 80.25). Stop is lowered to breakeven at 80.25, to give it a little breathing room, yet guard against a strong rebound from 79.16/22 in case we’re wrong. We won’t put a target yet, but will assess downside momentum of the current decline.