AUD JPY - WITH A STRONGER BULLISH SIGNAL, 100s OF PIPS IN SIGHT

The Daily Chart's Pennant for this pair has finally been broken with Bullish candles breaching the Resistance barrier at 96,50. Given the size of this Consolidation which has taken 5 months to be formed, there is a potential for a move of several hundred pips over the next few weeks. Nevertheless, the candles that have started this breakout have so far been small and appear to be too weak to support the type of profitable, strong and reliable breakouts that are associated with these Consolidations. We may therefore have to wait for either a temporary pullback to test the Resistance or a small Consolidation setup followed by a more convincing Bull signal.

The overall direction of the pair has been bullish since August of 2013, giving added support for the continued strengthening of the Aussie dollar.
DAILY CHART



















The breakout started a few days ago on August 22 last week and has continued moving higher but with weak candles.


DAILY CHART















Breakouts from Consolidations need to have stronger candles otherwise they could turn out to be False Breakouts or volatile trends. For us to trade this setup, we would need a setup such as a small Consolidation followed by a stronger Bull candle;
DAILY CHART - AUD JPY - NOVEMBER 2011














 
Or a pullback to test the Resistance boundary and then give us a stronger Bull signal.
DAILY CHART - NZD CAD - MARCH 2014
As stated earlier, it is still possible for the breakout to continue moving higher without either of these setups being formed. The more eager of traders may to take the risk of getting in on the trade to avoid missing out on a big payday in this slow period for the market. However, past examples in the Currency Market suggest that waiting on these setups is the better way to protect our Stop Losses from being taken out by spikes along the way. Whatever route one takes, always ensure that your targets and Stop Losses are carefully chosen and the risk taken is within your trading rules.

Happy Trading.




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Duane Shepherd 
(M.Sc. Economics, B.Sc. Management and Economics)
Currency Analyst/Trader
Contact: shepherdduane@gmail.com
Twitter: @WorldWide876
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