Hi Traders! AUDJPY short term forecast update and follow up is here. On August 17th 2022 I shared this “AUDJPY Short Term Forecast And Technical Analysis” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, the price which was moving lower has created a bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently it looks like a deeper correction has happened and the price which is moving higher has reached a key resistance zone which is formed by the 100%(95.528) Fibonacci expansion level of the first wave of this correction. The price respected this zone and is bouncing lower from it. In addition to this, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed at 94.426 and the second high that has formed at 95.148 based on the MACD indicator. The price then moved lower and broke below the last low at 93.489 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a correction is happening.and also, based on the Parabolic Sar we could see that the dots are above the price which we may consider as yet another evidence of bearish pressure. Until the key resistance zone shown in the image below (marked in red) holds, my short term view remains bearish here and I expect the price to move lower further.
AUDJPY H4(4 Hours) Chart Current Scenario
Based on the above mentioned analysis my short term view was bearish here and I mentioned that until the key resistance zone holds I expect the price to move lower further. The price action didn’t follow my analysis here and this idea failed. After the bearish convergence I was expecting the price to move lower further after pullbacks but the price moved higher, broke above the key resistance zone and is currently holding above it, thus invalidating this bearish view. My current view on AUDJPY is neutral.
So traders, this is why I wanted to show this example to help you understand why we should always trade based on the facts and hints provided by the market and take the right actions according to that. Even though we had facts supporting the bearish view here, the price moved higher, broke above the invalidation level and is holding above it which we may consider as a fact provided by the market opposing this bearish view. Also, you should keep in mind that losses are part of trading we can’t expect every trade to go as per our plan and provide us profits. In trading, we can’t avoid losses but in order to be successful in trading, we should know how to cut losses early and how to manage the trade when the price goes in the opposite direction.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
