I’m not looking here at risk-on strategies or market sentiment, but rather a convolution of events which seem to be favouring an AUD/JPY rally?
- EUR/AUD has broken its major support trendline and looks in danger of reversing lower towards 1.22/1.23
- EUR/JPY market is exceptionally short
- EUR/USD market is also short with heavy stops above 1.2625
- USD/JPY has solid technical support at 79.00/10 and the Japanese authorities will surely soon try some new tactics in order to weaken the Yen
- AUD/USD could easily reverse back towards 1.0250 without endangering the downtrend
I haven’t been following this pair too closely, and in the current risk-off climate it’s undoubtedly a dangerous play but all contrarian plays are. I fancy a medium term long play here, building longs above 77.50 with a strategy stop-loss below 76.50 and a minimum target at 82.00.
