AUD/JPY trade idea: How to play the long term trend accelerating lower

Introduction

According to AQR the quantitative hedge fund and Yale University, over the past 100 years markets moved in trends. Trends are successive upwards and downwards movements in price that occur at a greater frequency than would be predicted by randomness alone. The following trade idea is a momentum trade idea which takes the assumption that the market will continue moving in the way it has over the previous sessions. momentum trading, is different than trend trading due to the time horizon of the trade as momentum trades will happen intraday or over the course of a single session while trend trading is done over the course of a week or more.

Market summary

Price

AUDJPY last price was ¥ 87.9193.

Trend analysis

In the short term AUDJPY has been decelerating lower. In the long term AUDJPY has been accelerating lower.

Value analysis

Over the past 20 days, the AUDJPY price increased 6 days and decreased 14 days.

For every up day, there were 2.33 down days.

The average return on days where the price increased is 0.6124%

The average return on days where the price decreased is -0.587%

Performance

Over the past 20 Days, the price has decreased by -4.51% percent.

Over the past 20 days, the average return per day has been -0.2255% percent.

Trade idea

With the short term trend being the stronger of the two, we propose a short trade idea with an overnight time horizon.

The trade idea

Taking into account the long term trend accelerating lower, we propose a short trade idea with an overnight time horizon.

Intraday predictions

AUD/JPY trend analysis

AUDJPY last price was ¥ 87.9193 . The long term trend accelerating lower is stronger than the short term trend decelerating lower. This trade goes short when the price was moving lower and accelerating over the past 20 days.

AUD/JPY value analysis

every up day, there were 2.33 down days. The average return on days where the price increased is 0.6124% The average return on days where the price decreased is -0.587% Over the past 20 Days, the price has decreased by -4.51% percent. Over the past 20 days, the average return per day has been -0.2255% percent.

AUD/JPY worst/best case scenario analysis

Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for AUDJPY, is $ 87.067332 , and the best case scenario overnight is $ 88.771174 . levels outside of this range are unlikely, but still possible, to trade. We are 50% confident that $ 88.211 could trade and that $ 87.4205 could trade. These levels are within statistical probability.

Expected range

Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for AUDJPY, is $ 87.067332 , and the best case scenario overnight is $ 88.771174 . levels outside of this range are unlikely, but still possible, to trade.

We are 50% confident that $ 88.211 could trade and that $ 87.4205 could trade. These levels are within statistical probability.

Probability vs payout chart

This graph contrasts the percentage payout of holding a position vs the probability that the payout occurs. The red and green columns represent the probability of stopping out and taking profit and their associated payouts.

Key takeaways

• Price today ¥ 87.9193

• Over the past 20 days, the AUDJPY price increased 6 days and decreased 14 Days.

• For every up day, there were 2.33 down days.

• The average return on days where the price increased is 0.6124%

• The average return on days where the price decreased is -0.587%

• Over the past 20 Days, the price has decreased by -4.51% percent.

• Over the past 20 days, the average return per day has been -0.2255% percent.

• Over the past 20 days, The price has on average been accelerating: 0.016¥ per day lower

• Over the last session, the price decreased by -0.3369 ¥

• Over the last session, the price decreased by -0.3832 %

• Over the last session, the price decelerated by -0.2064¥