The AUDJPY price is forming a consolidation which could lead to a breakout opportunity, what should you look out for?
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The AUDJPY price could be forming a breakout opportunity at a key resistance level. The price of AUDJPY could break either way however, the higher time frames are suggesting a move higher is more likely. The strength meter is showing us that the Japanese Yen is in a reversal zone, this could see the recent JPY strength reverse.
The weekly chart showed us that price has rejected the previous swing lows and formed a strong bullish tail candle. This tells us that buyers are aggressive in the market and we saw a breakout of the weekly highs. If this momentum is going to continue we could expect to see the price move towards the previous swing highs.
Going down to the lower time frame we can see the 1hr chart is showing price is forming a consolidation. If we are looking for long ideas in line with the higher time frame, we need to look for opportunities in line with this bias. This could happen in one or two ways. The first way would be a break lower, but then a move back within the range. This would show a false breakout and we could see a move back to the highs of the range and even break beyond. The second way is for a traditional breakout of the highs for a move higher.
Alternatively, the risk to the trade could be a break lower. This could occur because we have seen the VIX move higher. When this happens volatility rises and we could see stocks move lower and have currencies like the JPY benefit. If the price breaks the lows we could look for an opportunity lower.
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