Potential signal:
- I am a buyer at this point, with a stop loss at the 109 level, and a target of 111.40 above.
- The Australian dollar is a currency I am watching on Monday, as it seems like it is trying to turn things around against the Japanese yen.
AUD/JPY
The Australian dollar has bounced against the Japanese yen after initially selling off at the open on Monday. We broke down below the ¥110 level but have since seen buyers coming back in to take advantage of a little bit of support. The 200-day EMA sits here as well, and of course, we have the stochastic oscillator crossing in oversold conditions.
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Ultimately, the Australian dollar is backed by the Reserve Bank of Australia and its hawkish attitude, while the Bank of Japan, although expected to raise rates this week, will struggle to raise rates multiple times due to the debt constraint. The energy situation in Japan could become very dire, as it does not produce its own energy, and that could cause some issues down the road as well.
As long as we stay above the 109-yen level, I am bullish
That being said, this setup that I see in this pair right now is just a simple continuation of the longer-term consolidation range. As long as we stay above the ¥109 level, I don't know that much has changed, despite the fact that we have slid here.
The Bank of Japan has intervened a couple of times, but quite frankly, they can't fight the entire market forever, and they even had the Americans come in and help them last time. With that being the case, and the fact that the Australian dollar itself looks fairly strong, I like the idea of buying this pair in this neighborhood, as we not only have support, but we have the 200-day EMA and the Japanese yen somewhat weakening.
Ultimately, this is a market that I think is neutral to bullish, and we will see more of the same behavior. This is a pair that I am very interested in at the moment.
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