The Aussie dollar has been slightly positive in yen terms on Friday, as the market finds itself in the middle of a larger range that is obvious to all.
AUD/JPY
The Aussie dollar has been slightly positive against the Japanese yen during trading here on Friday as markets continue to see a lot of noisy behavior overall.
We are sitting basically in the middle of a 500-point range. We're just 3 pips below the actual center line of this. So, it's interesting to see that we've stopped here. Could be a sign that we're turning around; we'll just have to wait and see, but we are hesitating. At this point in time, I look at this more or less as a binary trade. We break above the candlestick; that's a good sign; we may go back to the top of the range. If we break down below it, we may go to the bottom.
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Central Bank Divergence and the 110 Yen Floor
The bottom of the range is at the 110 yen level, and it does have the 200-day EMA sitting there, so there is a compelling technical analysis story. Nonetheless, the RBA in Australia is somewhat hawkish. The Bank of Japan keeps pretending like it can be hawkish, rattling the markets, but even if it raises rates, it's still light years behind everybody else. The Japanese debt load is simply too much, and this market could very well find its way much higher given enough time.
If the market were to break down below the 110 yen level, that could change my thesis completely, and I suspect at that point in time, you would have the Japanese yen strengthening against almost anything and everything out there. I don't see that.
So, I like the idea of buying dips, but now we have a somewhat neutral candlestick sitting in a fairly neutral area. I'll be watching to see which direction it breaks.
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