Chart of the Day AUDJPY
AUDJPY Potential Reversal Zone - Probable Price Path
Asian stock markets were negative following a lacklustre performance across global peers amid lingering coronavirus concerns and as US-China tensions were stoked by several escalatory reports such as the US enacting sanctions on 4 Chinese individuals for human rights abuses including the Xinjiang security bureau director and a top member of the Chinese Communist Party. ASX 200 (-0.3%) was led lower by underperformance in the energy sector after the recent pullback in oil prices and amid ongoing lockdown headwinds, with the Victoria state Treasurer anticipating GDP to decline 14%, although the downside for the index was stemmed by resilience in the tech sector which continued to ride on the work from home bandwagon.
Nikkei 225 (-0.8%) was subdued by the weight of the haven currency inflows and with some large retailers pressured including Fast Retailing, Seven & I and Lawson after weaker earnings. Hang Seng (-1.4%) and Shanghai Comp. (-1.1%) underperformed after PBoC inaction resulted to a total CNY 290bln liquidity drain this week and as anti-China sentiment persisted with the Trump administration said to be finalising regulations this week that will bar US government from purchasing goods and services from several Chinese tech firms including Huawei and ZTE. Furthermore, it was also reported that China state funds were also said to plan cutting holdings in some companies including PICC.
AUD: Victorian Finance Minister Tim Pallas said that Victoria’s economic recovery will take two and a half years and announced the launch of 534 million Australian dollars in corporate support measures
JPY: Japan’s June production price index fell 1.6% year-on-year, narrowing from 2.8% last month, and also smaller than the 2% decline expected by the market. Japanese media reported that Tokyo had at least 220 new coronavirus infections on Thursday, setting a record high in a single day
From a technical and trading perspective, AUDJPY in line with the majority of riak FX appears to be moving into a downside corrective cycle to complete the ‘C’ leg of a broader ABC wave versus the impulsive advance form the pandemic crisis lows seen in March. Bearish exposure should be rewarded on a close at current or lower prices today. Bears can also look to add to positions on any intraday pullbacks to 74.50. The downside probable price path should ultimately see a test of 71.00 as the measured move equality objective.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!