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AUD/JPY - Trading Framework

AUD/JPY - Trading Framework

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.

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