The AUD/JPY pair has been bullish in August rallying from a low around 94.00 to a high around 97.25. As we begin September, price continues to rally. The market is bullish. Note in the daily chart that price is at new highs on the year after breaking above 96.50, which was a sign of bullish continuation. As price moves higher and the RSI moves into the overbought territory, we have to consider a possible pullback. A dip would be welcomed to give buyers a better price to get in on a bullish trend development.
However, if the pullback falls below 95.00, we are likely back into consolidation mode, and any bullish attempt after the dip would have to be limited. Thus if we are to plan a bullish trade, we might need to put a stop just below 95.00, like 94.80.
When price comes back, we should look for price to find support around the 95.50 area. We might even expect buyers around 96.00. Let's say we plan a buy around 96.00. A stop-loss at 94.80, would risk 120 pips. To the upside, the market has the 100.00 handle in sight. There is really no significant resistance levels before this psychologically level. Thus an entry at 96.00 would yield a potential reward of 400 pips if price can elevate to 100.00. This is a 3.33:1 reward to risk ratio, and might be worth considering for a trade that might take a few weeks or maybe even a few months to develop.
Also, if the daily RSI falls to 40 then stalls, we should anticipate a subsequent bullish attempt, which would continue the bullish mode revived in August.
AUD/JPY Daily Chart 9/1
However, if the pullback falls below 95.00, we are likely back into consolidation mode, and any bullish attempt after the dip would have to be limited. Thus if we are to plan a bullish trade, we might need to put a stop just below 95.00, like 94.80.
When price comes back, we should look for price to find support around the 95.50 area. We might even expect buyers around 96.00. Let's say we plan a buy around 96.00. A stop-loss at 94.80, would risk 120 pips. To the upside, the market has the 100.00 handle in sight. There is really no significant resistance levels before this psychologically level. Thus an entry at 96.00 would yield a potential reward of 400 pips if price can elevate to 100.00. This is a 3.33:1 reward to risk ratio, and might be worth considering for a trade that might take a few weeks or maybe even a few months to develop.
Also, if the daily RSI falls to 40 then stalls, we should anticipate a subsequent bullish attempt, which would continue the bullish mode revived in August.
AUD/JPY Daily Chart 9/1
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