I am fundamentally a bear on the AUDJPY. The Australian economy is based on commodity exports which are currently fundamentally weak, despite bullish reversals intermittently, depending on market uncertainty sentiment post-Brexit and The Australian Elections which are “hung”, American elections coming up. My bias is based on the contraction shown by economies in the Asian Block and the need for Australian commodities iron ore, corn, coal etc., and its biggest trading partners are China and the Asian block. Chinese and Japanese economies shows signs of slowing down/contractions, and both have had and will continue to have potential central bank interventions to prop up the economies, which i think might have short term effectiveness, but longer term will have little or no impact. India will also face headwinds due to the exit of Rajan, and a new governor which might show more receptiveness to political interference. This might also have a negative impact on their economy due to changes in fiscal and monetary policies. They are all affected by Europe and Britain and the effects of Brexit, which might lead to recession in those economies, and negative impact on the Asian block, directly impacting Australian economy.
My long term strategy – probably over a period of 12 -18 months, will therefore be based on looking for lower lows on the weekly and monthly charts at either the 72 level, and thereafter at the 66/67 level. The support has been at the following levels: 58.7 in 5/1995, 55 in 10/2000 and 9/2001, a further lower low in years 10/2008 and 1/2009, then in 5/2010, 10/2011 found support at 71.5, and then support at 72.4 on 24 June 2016 wich was related to post brexit.
I therefore see the near term uptrend as a pullback, but based on the fundamentals essentially bearish and will continue a downward trend as outline above. Please see the charts below for further notes.
Please leave me any comments – all input would be appreciated.
I will be using this chart to determine near term long setups on the waves and smaller fractals more exactly. On this chart the stoch is entering overbought area, but might continue on another few periods before resuming downwards. This is supported by the stochs on the higher timeframes above, showing a bigger picture.
Fundamental Bias is Bearish on the longterm (12-18 months) setup. I will now look for the current up trend, which is a pullback i think, to the Fib 50 level of about 76.5 to 80, before continuing again with the bearish trend downward trend initially to support at 72.00 with another significant pullback and then continue down to 66/67 at support, before it might reverse. As this is long term, it might change if the fundamentals which underlie, changes.
Note the Sotck on this chart which is continuing down as well and indicates possible divergence further to the undersold area. Also note the double top which formed at April 2013 and the second top at Nov 2014 at 103.3 levels, corresponding to the fundamentals at the time. The low which we saw on 24th June was not a lower low yet, and probably, just the down leg after the double top, leaving space continue downwards at 72 to next major support at 66.
Looked at the double top more closely and noted that this chart shows the bearish downtrend in the third wave down - so maybe 2 more waves down, each wave about 4-5 months? 72 and 66 being support then. Also noted the two oval points at the June 2016 low and the corresponding stoch indicating a 5/8 crossover and start of divergence iindicating possible start of uptrend for what i think is the 4th pullback?
Pullback to Fib 50 or 61.8 levels 76.5 - 78. Also not Stochastic also showing further downside to oversold level
The Red Vertical line on the left side of the chart denotes my previous charts on 28 June.
I am long on this pair currently and will continue till i see signs of reversal between the 78-80 area. I see this reversal initially down to 72-73 area, and then another pullback for a period, and then further down to 66. The orangish line is my prediction of last week till today, and if you refer back to my previous hourly chart, and further continuation now. I think the current bullish role is part of the pullback, and is fueled by all the prevailing market sentiment which has caused some commodity prices to pick up, notably Gold and silver. This could continue till after the American elections in November.
2 thoughts on “AUD JPY LONG TERM TRADE PLAN – 12 -18 MONTHS – UPDATED 4TH JULY 2016 – HOURLY CHART”
Excellent post. I can’t wait to see more of your analysis!
Thank you for contributing to the community.
Thanks. I think i uploaded it in bits and pieces as i did not know how to do it. The post is now complete