The price of AUDJPY is at major support however the current market environment is keeping the sellers in control. Could this change in the long term and does it offer both short and long term trading opportunities?

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Long Term- Commitment Of Trader Reports

The CoT reports allow us to see the changes in long and short positions between the commercials, non-commercials and non-reportables. In a down trending market the commercials will increase their short positions as they are looking to buy a currency as the price decreases. However, when the long contracts exceed previous levels of buying we often see a reversal in the markets.

We can see a similar pattern forming today, the latest CoT data shows a similar level of long contracts by the commercials as seen in March 2020. Commercials bought the AUD heavily in this period as the price fell sharply due to the uncertainty of Covid-19 on the markets. 

After this the market rallied significantly in line with the commercials buying. Recently the long contracts rallied to the same level as before offering us an opportunity to potentially look for buying opportunities on AUD. 

The AUDJPY monthly chart is in an uptrend and has recently tested the previous swing highs, this could lead to a potential reversal back into an impulse phase on the trend. This CoT data combined with the monthly trend could see the price start to rally if we were to see a change in the trend.

Short Term

In the short term looking at the 4hr time frame we can see the downward trend. We have to stay on this side of the market until it changes or reaches a major support point. This is because the daily time frame hasn’t formed the higher high and higher low pattern we would want to see in an up trending market. 

The 4hr could offer a short opportunity at the previous swing lows if it forms bearish price action within this area. If the price reaches the key support and changes trend we can begin to look for long opportunities. 

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About The Author

Jonathan Kibbler

Jon Kibbler, our Senior Market Analyst, boasts over a decade of trading experience. He specializes in dissecting the intricacies of financial markets and sharing his expertise with precision. Jon’s insights have been featured at renowned events and platforms like Coindex, Forex Analytix, and Forex.com.

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