This is an update to our position trading strategy as mentioned in the weekly report. We’d sold AUD/JPY at 78.40 with today’s strong rebound. The rebound off 77.51 support was as expected even though the strength is a bit surprising, mainly thanks to return of risk appetite.
At this point, there is no overwhelming strength in Aussie elsewhere. AUD/USD is just in corrective recovery. EUR/AUD is held well above 1.5721 support. GBP/AUD also held well above 1.7868 support. AUD/CAD is in very tight range around 0.94. On the other hand, EUR/JPY stays below 125.95 resistance. GBP/JPY is well below 144.84 resistance. CAD/JPY is also below 83.98 high too.
Thus, for now, there is no change in the view AUD/JPY’s rebound from 77.44 is a corrective rise. And we maintain the view that whole rise from 70.27 has completed at 79.84, on bearish divergence condition in 4 hour MACD, after failing to sustain above 55 day EMA.
While current rebound form 77.44 might extend, we don’t expect a break of 79.84 resistance. A break of 78.33 minor support will suggest that the recovery is completed and add some credence to our bearish case.
We’ll hold short in AUD/JPY (sold at 78.40). Stop is kept at 79.84. As we don’t expect a break of 70.27 with the next fall, our target will be put at 61.8% retracement of 70.27 to 79.84 at 73.92.
