The Australian Dollar declined this morning in the second session of the week after we saw the RBA statement and held the cash rate at 1.5%, in addition to the decrease in retail sales from 1% to 0.6%. As a result, the AUD/JPY pair declined from its highest level in three months and is trading now at 85.93.
The AUD/JPY pair is still trading in a series of corrective waves. It returned back after reaching the 38.2% Fibonacci and broke the downtrend line, so it rose after the breakthrough. Furthermore, before breaking the trend line we noticed that the pair made a wedge pattern and broke upward, then retested it and rose sharply. The Stochastic indicator got across above the 80 level which is a sign for the down movement.
The Next Few Days
After we saw the trend line breaking we can buy the pair now at the current levels 85.93, keeping our first target at 87.40 and the second one at 89.20. Still, in case it declines a little after the bad news from Australia we can take another buy position at 85.20.
This week the markets don't offer much news from Australia and Japan, except for the trade balance from Australia on Thursday. We have another important event in Hamburg - a G20 meeting, accompanied by speeches about the global economic growth. This may change the market direction.
