AUDJPY - Short potential

26 mar 2023

Another pair that finished the week with solid momentum and tested some significant levels in the process. Continuing with the short bias we are looking for a possible continuation entry here, entering either upon confirmation of a completed retracement or upon a break of last week’s lows. Firstly, lets looks at the retracement, price climbed into 87.00 late last week and looked to be responding to the level with selling pressure. Given the momentum that last week saw it would make sense for this level to once again be tested to establish some resistance for the week or more likely is the fact that price pushes a little past this towards 87.50 early in the week. Rejection away from anywhere in between these price points would likely confirm that the retracement to the previous area of breakout has been completed and either a shooting star or bearish engulfing formation would likely be enough to enter short positions initially targeting last week’s lows at 86.00. 86.00 will not only act as our first target but as our continuation entry point. For those of us comfortable trading the retracement we can either take our profit here and enter again or we can add an additional position and continue to ride price down. A break below 86.00 would likely be enough although closes below 85.80 will be preferred just to be clear of some of the erratic behaviour we have seen around this level previously. Overall target regardless of entry will be placed at 84.20 and once we get below 85.80 there isn’t much in the way to stop this target being achieved quite quickly. Breaks above 88.50 invalidate this outlook and attentions would be best served looking for entries into 90.20 as a result.