FOREX TRADING IDEA AUD/JPY

Forex Trading Idea AUD/JPY

Strategy

Buy AUD/JPY at 76.50. Stop at 75.05 and profit target at 78.20.

Technical View
Recently, price broke out of a downtrend channel and had moved to a high of 77.08. Following this high, there was a price correction but this correction was halted by the 20EMA line as well as the Fibonacci 50% correction point. Price has moved higher for the past 3 days and we are looking for this rally to continue, first to the previous high of 77.08 and later higher to the Fibonacci 127% price projection at 78.15. The August high also comes in at 78.45. This is the target zone we think price can go to.

MACD is still bullish and rising which is a hint of a bullish price trend ahead. The fast line of the MACD indicators has stayed above the zero line, keeping the bullish trend intact and now starting to move higher. Stochastic had a bearish crossover in the overbought zone and has moved lower but we could be seeing a bullish crossover if price can continue to move higher. Both momentum indicators are hinting of a bullish price trend ahead.

Fundamental View
The US election is over and an outcome is forthcoming and this has reduced risk in the currency market, which is not in the Japanese yen favour. Current US President Trump has grant permission to US President elect Joe Biden to form his transition team. This is likely to reduce risk as it means the new administration will have time to prepare and ensure an orderly transition, avoiding a lengthy, and possibly disruptive, period where it comes to grips with the functions of governing.

Coronavirus cases may be increasing in the world at the moment but with various types of vaccines coming into production soon, this is likely to offset the risk and impact from the pandemic. This is likely to reduce the risk and impact from the coronavirus which is likely to weigh on the Japanese yen.

Australia proper handling of the COVID-19 situation has kept the number of coronavirus cases low and shield its economy from mass lockdown which is likely to benefit the Aussie economy. Japan on the other hand is experiencing a second wave of coronavirus pandemic which is likely to weigh on the Japanese yen.

The Chinese economy is one of the few economies in the world that is likely to experience positive growth in the 2H20. This is likely to benefit the Australian economy as China is Australia top trade partner. This is likely to keep the Australian economy and its currency strong.

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