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Short Term AUD/JPY Short Opportunity

Last updated 4/22/2009 7:24 PM EST (GMT -5) 0 Comments - Add your comment

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Bradley W. Gareiss

Technical Analyst, GFT

There has been a short term downtrend forming on the AUD/JPY over the past two weeks.  There is a short term bearish Gartley and double top top on the 30min Chart that converges with the bearish trend line.  We see that our sell entry is near the level that provided previous strong support on the 2hr Chart as well.  Previous support often becomes new resistance.

We are looking to sell the AUD/JPY if it rises to 70.47 (Point D).  Point D is located at the convergence of the following points:

The Bearish Gartley on the AUD/JPY shows above average convergence at the sell entry.  Any trade can fail, but this certainly would qualify as a high probability trade assuming it completes.  We will now go over what to watch for assuming the pair continues rising to our entry at 70.47. First, we need to watch how quickly CD completes.  We are looking for the CD leg to rise slowly and enter the trade near our hypothetical entry on the 30min Chart.  If there are long bars near the completion of the CD leg, we will not take the trade.  If the pair comes within 7 pips of reaching our entry, does not enter, and reaches T1 before entering, the trade is invalid.  The trade is also invalid if the pair falls below 68.90 before hitting our entry.

To recap, we will look to sell the AUD/JPY at 70.47 with our stop placed at 70.74.  Our initial profit targets are 70.00 (38.2% of CD) and 69.91 (61.8% of CD).

2hr Chart - Bearish trend line converges with our sell entry.	30min Chart - Bearish Gartley; sell @ 70.47.

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