AUD/JPY Forex Trading Impulse Wave to Resume? – May 23, 2014

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AUD/JPY Forex Trading Impulse Wave to Resume? - May 23, 2014

AUD/JPY Forex Trading Impulse Wave to Resume? - May 23, 2014

AUD/JPY has been forming a rising channel on its daily forex trading time frame, indicating that the longer-term uptrend is still valid. The pair is even finding support at the middle of the channel and might be headed back for the top around the 97.00 forex trading levels.

Stochastic has made lower lows while price made higher lows recently, forming a bullish divergence. Reversal candlesticks can also be seen around the 94.00 major psychological support and area of interest.

Going long at 94.00 with a 150-pip forex trading stop and a target of 97.00 could yield a 2:1 return on risk. Take note that the middle of the channel is also the 50% retracement from the latest swing high and low, making it a solid support area in case the fundamental bias for the pair is still to the upside.

**relatedarticle**

AUD/JPY Forex Trading Forecast

Sentiment for the Australian dollar has weakened in the past week when budget concerns and a change in RBA rhetoric led to selling. Data from China has also pointed to a deeper slowdown while risk appetite has weakened – both of which resulted to lower forex trading demand for the higher-yielding Aussie.

As for the yen, the currency was boosted by a relatively upbeat BOJ economic assessment. The central bank even upgraded their forecast for capital expenditures and mentioned that they are not looking to expand their stimulus efforts any time soon.

Earlier this week though, China reported a strong rebound in its manufacturing PMI as measured by HSBC. The index surged to its highest level in five months and came within a few points close to indicating industry expansion. This was enough for several AUD bulls to jump back in their long positions.

However, if risk sentiment remains weak, AUD/JPY might still make it back down to the bottom of the channel around the 90.00 major psychological level.

To contact the reporter of the story: Marco Roemer at marco@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.