Yen strength is the talk of forex markets. An unexpected surge in JPY (accompanying USD weakness) is driving major crosses to back towards the extremes of 2016 trading. Naturally, USD/JPY and EUR/JPY are in focus, but traders may wish to look further afield for opportunities.

Which brings us to AUD/JPY:

20160408 audjpy

The recent surge in JPY sees the pair re-enter the trading zone between 79.60 and 82.10 . Traders may wish to deploy their plan to trade this zone, but I'm cautious about shorting AUD/JPY.

Warning: If the Bank of Japan, or the Abe government, decide to act on this Yen strength there could be a sudden jump in AUD/JPY.

For this reason, I'm only looking at long trades. I'm looking for buy signals closer to 79.60, or a break back above 82.10 . A move toward 79.60 is not out of the question, as evidenced by the stochastic at the bottom of the chart. Although the %K (black) line is clearly in overbought territory, the %D (red) moving average is still trending down.

Given the potential for a sharp move, any traders looking at employing stop-entry orders may wish to set a wide boundary on the order to avoid missing the trade in a fast moving market.