AUDJPY recently made a strong forex market break past the 96.00 major psychological resistance level, which has acted as a long-term ceiling for price rallies. This could be a sign that more forex market gains are in the cards for the pair, but a correction might take place first before it heads further north.
Using the Fibonacci retracement tool on the latest swing high and low shows that the 38.2% level lines up with the 96.00 mark, which might serve as forex market support moving forward. Stochastic is making its way in the oversold zone, which is a sign that buying momentum could return soon.
Going long at the 96.00 mark with a stop below the 61.8% Fib or the 95.00 handle and a target of new highs near 98.00 or higher could yield at least a 2:1 return on risk. A forex market entry could also work if stochastic crosses above the oversold area early, hinting that the climb could resume right away.
Adjusting the stop to entry once price hits the 97.00 mark or previous highs could be a good way to minimize forex market event exposure or lock in gains. Adding on the break of the previous highs could improve the return on risk.
Forex Market Forecasts
Recall that the RBA recently dropped its dovish bias, although RBA Governor Stevens still emphasized that the Aussie is trading at historically high levels. He did say that forex market intervention is not one of their options at the moment, allowing a relief rally for the currency.
As for the yen, BOJ Governor Kuroda’s recent testimony at the Jackson Hole Summit suggested that the central bank is open to adding stimulus if inflationary pressures weaken. Data from the Japanese economy has weakened in the months following the April sales tax hike, and forex market participants are waiting to see if a recovery was made in the third quarter of this year.
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