The AUD/JPY currency pair sold off heavily this month following the retesting of the new area of resistance between 89.00 and 89.30 which we referred to in our last report about the pair. Last week the pair made a top smaller than the previous one, which means we are in a downside wave. We have to be careful because we recognized a bottom higher than the previous one, so that we have two trend lines - one for the uptrend and a second one for the downtrend.
The pair has a support area at 85.70-85.90. The prices reached it last week, so we can expect an upside movement this week, in addition to the pair reaching the 50% from the rising wave from 81.65 to 89.29. We can predict the pair will begin another series of impulse waves.
The Next Few Days
After we analyzed the chart well we can discover that we would work on the breaking out of the pair. If the AUD/JPY breaks the downtrend we will buy the pair and keep our targets at 88.20 and 89.05. Conversely, if it breaks the uptrend we will sell the pair and keep the target at 84.62 (61.8% Fibonacci). Still, we predict the pair will break the downtrend and rise again, so we can take buy positions now with a small lot at the current level 86.15 and keep the T/P level at 86.85, then wait for the breaking out.
This week the markets don’t offer any hot news from Australia or Japan but you have to be careful about any uncalendared news that can change the market direction.
