A setup is simply “a setup.” For now, the AUDJPY trend is down, but the reversal pattern is developing in the AUDJPY.
Ahead of the RBA decision tonight the AUDJPY has broken key support as the China/US trade negotiations apparently are strained.
The AUDJPY broke out of the 2019 range and into new yearly highs last week. As long as we remain above the 79.80 level the risk remains to the upside.
The AUDJPY fell aggressively overnight to channel support following RBA Governor Lowe’s comments about the path of the next rate move would be.
The AUDJPY spiked past resistance and tagged the 61.8% key Fibonacci retracement and also the channel resistance.
The AUDJPY broke higher above the 38% retracement and now targets the 61.8% retracement near 85.50 with a bull flag formation supporting the move higher.
The Yen has been consolidating in price since 2016, following two major moves since the global financial crisis. The 4-year bear move from 2008 till 2012 saw the USDJPY drop from 123 to roughly 75, nearly 40% lower.