Will AUD/JPY Rally Reach 80.00?

Last updated 5/26/2009 1:40 PM EST (GMT -5) 2 Comments

FX360 Technical Analyst Staff

Technical Analyst, GFT

Price action over the next 24-48 hrs should provide a more confident near-term directional bias as the current AUD/JPY short-term rally is facing some rather significant resistance near 75.0-76.0 based on recently established peaks. A break above these levels suggests a potentially strong bullish continuation, or break-out, up to 50% daily support near 79.78 at which point a bearish gartley pattern is projected to complete (see point D near200% of XA and 161.8% of BC).

If prices rally to the projected pattern completion, we're looking at a potential sell at 79.58 with stops at 80.68. Any gaps and/or wide-ranging candles prior to entry will invalidate this setup. Additionally, a move below point C (70.51) prior to entry will also invalidate this specific setup. If our short is in fact triggered profit targets will be set just above 38.2% and 61.8% of the CD leg at 76.40 (T1) and 74.26 (T2).

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  • Daily Chart - Bearish butterfly pattern projected to complete at 50% resistance.
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  • Daily Chart - Bearish butterfly pattern potential if prices rally to point D.

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Comments (2)

cslos77

May 27, 2009 at 10:00 AM ET

Hello Roger, if you look to the previous low before point "X" (@65.00) could this not also be a 3-drive pattern (point A falls on the 78.6 of this leg). I only ask because the stop seems tighter than usual for a Butterfly pattern, closer to those I've seen you use on 3-drives.

Thanks,
Jeremy

rstojsic

May 27, 2009 at 02:35 PM ET

Hi Jeremy, great question! We could arguably call this a 3-drive, but that wasn't a reason behind the stop...just a result of fib convergence as usual, which for this particular setup happens to be relatively tight.

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