USD/JPY
The USD/JPY pair tried to rally during the course of the session on Tuesday, but struggled at the 118 handle. By doing so, we ended up turning the market back around and forming a shooting star. The shooting star of course is a negative sign, and therefore I feel that a break down below the daily candle is reason enough to start shorting this market again. Don’t get me wrong, I’m not looking for some type of major breakdown, but I think a return to the 116.50 level is a reasonable target. I also think that short-term rallies should end up being selling opportunities, as the 118.50 level continues to be massively resistive above. If we did break above the 118.50 level, at that point in time I feel that the market could be bought, but right now it looks like we are simply going to consolidate in the area that has been the range for the last couple of weeks.
AUD/USD
The AUD/USD pair rallied during the course of the session on Tuesday, but struggled at roughly 0.6950 or so during the closing hours of the US session. Given enough time though, I think that resistive candles on short-term charts could offer selling opportunities as the longer-term downtrend continues. Quite frankly, I don’t think that it’s likely to see this market rally for any significant amount of time, and I believe that the 0.71 level is essentially going to be what keeps this market lower.
At this point in time, I have a longer-term target of 0.68, and then eventually the 0.65 handle. Remember, Australia and the Australian dollar itself is considered to be a bit of a proxy for China, which of course is doing horrible at the moment and is seeing massive outflows of money. In a situation like that, nobody’s looking for raw materials to buy from Australia on the mainland.
