Timeframe: D1 Recommendation: Short Position
Entry Level: Short Position @ 94.75
Hedge Level: Stop Buy Order @ 96.00 (Take Profit Level @ 97.25)Take Profit Zone: 91.00 – 91.50
Stop Loss Level: 96.00 (We will not use a stop loss order and execute this trade as advised below)
The AUDJPY has rallied after a sideways downward trend as visible in this daily chart (D1). This currency pair is now approaching its horizontal resistance zone which is marked in red in the above chart. In addition the AUDJPY has is forming a head-and-shoulders reversal pattern and we expect this currency pair to correct back down to its horizontal support zone which is marked in blue in the above chart.
MACD indicates the momentum is fading as both the histogram as well as the moving average are approaching the centerline. We expect to witness a bearish centerline crossover as the correction unfolds. RSI is trading near overbought territory, but has failed to significantly cross into it which shows the absence of severe bullish pressures.
We recommend a short position at 94.75 which would be an addition to our previous short position which we took on September 4th at 90.75. We also have one hedge in place at 97.30 and recommend a second stop buy order at 96.00 with a take profit target for both open hedges at 97.25.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 96.00. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 91.30.
Here are the reasons why we call the AUDJPY currency pair lower:
- The AUDJPY currency pair has rallied and is now trading near horizontal resistance levels from where it can correct
- MACD indicates that momentum is fading and the histogram as well as moving average are approaching the centerline
- RSI is trading near overbought territory, but indicates the absence of severe bullish pressures
- Profit taking after a minor rally in order to realize trading profits at strong resistance levels
- New short positions by institutional swing traders