AUD/JPY Update

Since things are degrading rapidly I thought it would be a good idea to give you guys an update on what’s happening over on the AUD/JPY side.

If you are a noob then you may be unaware that the AUD/JPY is a favorite among carry traders and thus offers us a pretty close barometer of what is or will be going on over in equities. As a matter of fact quite often AUD/JPY happens to be leading even the S&P E-Mini futures. Perhaps that is to some extent due to the sheer size of the Forex market – the world’s largest with over $4 trillion in average traded daily value. Many traders are attracted to trading forex because of its high liquidity, around-the-clock trading and the amount of leverage that is afforded to participants.

Anyway, here’s a screen scrape of the 60-min AUD/JPY panel on the ZeroFX feed:

Well folks – it ain’t looking good if you’re long equities or the AUD/JPY. What I keep seeing in the past few days is one NLBL rejection after the other. There are attempts to produce a base and lure in buyers but instead of green candles we see sudden drops to the downside. I don’t think this is the right time to go bottom fishing – always remember the trend is your friend until it’s over. The 60-min panel shows clean rejection at the 75.85 NLBL which was followed by a drop through the 75.64 NLSL. This may be an AH fake out but we need to start breaching resistance levels. Not shown on this chart is a brand new NLBL at 75.83 – which is good for the next five hours. Whether we even get close is of course a completely different question.

And here’s the 5-min panel – almost the exact same configuration – a fractal of the 60-min chart. Again, we see rejection at a possible NLBL followed by a drop through the 76.27 NLSL – which is currently being retested. If you are a Zero sub then I recommend you look here for early signs of a reversal – assuming we’ll get one. That small divergence on the Zero signal may help lift us higher – if it doesn’t then you can probably expect continuation to the downside. FYI – since I took a snapshot of this chart we got a new NLSL at 75.2 – that should be active for the next half hour.

Cheers,