Why you need to pay attention to the Aussie/Yen currency pair, notes Fawad Razaqzada.
The risk-sensitive Australian dollar/Japanese yen pair (AUD/JPY) turned lower from a key resistance range in overnight trading, mirroring the price action on Wall Street where U.S. stock indices gave up earlier gains to close at their lows Tuesday evening.
The AUD/JPY has now for the second time in as many weeks failed to break through the prior long-term support at the psychologically-important 70.00 handle, which has now turned into resistance (see chart below).
Source: TradingView and TradingCandles.com
It is early, but rates could start to break down from here – possibly along with stock indices. So, it is definitely worth watching as it can be a good barometer for risk appetite.
The bears still have some work to do as short-term supports remains at 69.00 and 68.65, as too does the bullish trend line.
So far as the bulls are concerned, they need to wait and see whether the AUD/JPN will break and hold resistance at 70.00 in the coming days before looking for long setups. Alternatively, a deep pullback and a bullish reversal signal at some point down the line could be another way to look for long trades.
Fawad Razaqzada, Senior Market Analyst at TradingCandles.com, is an experienced forex market analyst and economist. He posts market analysis on all sectors from both a technical and fundamental. Previously he served as a market analyst with FOREX.com and City Index.
