Short AUD/JPY Day Trade: 1:3 R/R bearish setup

This was a developing Story...

While there are prospects of a long side opportunity on the swing trading developing, here: 

• AUD/JPY Price Analysis: Bulls getting prepared for a 1:3 R/R swing,

AUD/JPY is testing an hourly resistance zone following a correction of the bearish impulse, a retracement significant enough for where bears will be interested in selling at a discount. 

The price is to be monitored on a 15-min time frame and managed with a stop loss from entry for a 1:3 risk to reward ratio.

1HR chart

15-min chart

Update: Stopped out on the first attempt

Depending on your broke, the first attempts to short the correction could have been stopped out. 

According to FXStreet feed, the level was not hit and the high has only been 77.163:

However, taking a worst-case scenario...

The price action can now be monitored from a 15-min perspective for further short setups so long as conditions are met according to the strategy's rules. 

It should be noted that the win-rate and the minimum of a 1:2 risk to reward ratio of the strategy cater for breakeven results as well as losses.

Update:

The 15-min chart is being monitored for a deeper retracement to the 38.2% Fibonacci and prior bullish close within the bearish impulse. 

A rejection could give rise to the renewed bearish environment from which another setup could be applied. 

Update: Market bullish above structure

The market drifted steadily to the upside and while there are still prospects of a bearish setup, the support structure must be broken first:

 

Update: Sell limit placed

As can be seen, the short scenario has played out. 

The conditions for the validation of such a scenario is that the correction did not cross a 78.6% Fibonacci of the bearish hourly impulse.

Therefore, the correction remains classified as a correction as far as the strategy is concerned. 

Secondly, the price has broken the support structure in bearish conditions on the 15-min time frame from where a sell limit has been placed.

There are support risks to the downside though. However, if the price reaches the support, the conditions should be such that the stop loss can be moved to breakeven.

Lastly, we are entering the final hours of trade for the week. 

The risk of holding the position over the weekend are, 1) weekend news which can result in an opening gap, 2) spreads are wider at the open and the stop loss can be triggered, even at ECN brokers or brokers that offer raw spreads. 

AUD/JPY spreads are usually very wide.

Check with your broker what typical spreads are like on this pair at the open of Asia if the position is intended to be held over the weekend. 

Update: Sell Limit order filled

Short at 77.26.

Update: Breakeven achieved

The price has moved to the first area of support, but luckily for us, there is a new structure which means the stop loss can be moved to breakeven for a free ride towards the target. 

This now alleviates the weekend risk.

Update: Breakeven on 2nd attempt

The bears cannot catch a break!

Let us call it a day and see how things develop next week as the upside still has something going for it on a longer term view:

AUD/JPY Price Analysis: Bulls getting prepared for a 1:3 R/R swing