With all eyes on the RBA decision this afternoon, I thought today would be the perfect time to publish a post with a few AUD/JPY charts that I’ve been following and talking about on Twitter for the past few weeks.
I take a look at the setup which first became apparent on the higher time frames and then zoon in and take a look at a possible entry scenario.
As you can obviously see, for the last few years price has been trending upward in a beautiful ascending channel on the weekly.
The original setup was looking for a bounce off (or break through) the channel support. I didn’t want to blindly buy the support level and was expecting a rate cut from the RBA in April where I was looking to short through the level. Obviously this didn’t happen and we got a nice bounce off the level, confirming it’s strength.
More recently, we have got renewed rumours of RBA ‘media whispering’ from the RBA that a cut is all but certain. Following the Terry McCrann headline circus, the market is inclined to believe these stories written as fact and run in major newspapers. This meant a nice sell off down into the current zone.
If we now move to the daily chart we can see the zone I’m talking about. It is a level that has been used as support/resistance before and a re-test of broken resistance now acting as possible support from the most recent period of consolidation.
The nice long wicks followed by the most recent doji into this zone is showing us that the sellers are getting weaker and the buyers starting to take control.
No newspaper story a week out from the RBA should be taken as fact and for me, the market has given it too much credit. Maybe this price action is showing that the market is starting to agree.
Finally down to the hourly chart, we can see price being rejected out of the SR zone more clearly and now starting to show some strength as it pushes out of the zone.
Yes whether this setup plays out will all depend on the RBA, but the option is there to take a position on a good clean technical setup going into it. Especially if you are in the no cut camp.
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