AUD/JPY recently made a sharp selloff on global growth concerns and risk aversion but the pair seems ready to make a quick retracement. On the 4-hour time frame, the 61.8% Fibonacci retracement level of the latest swing high and low lines up with the former support area above the 91.00 major psychological level.
Shorting at this level with a stop above the previous support and a target at the recent lows around 88.50 could yield a high return on risk. Stochastic is still moving out of the oversold region, indicating that bulls are in control at the moment. Waiting for the oscillator to cross down before entering a short trade could be a conservative trade decision.
By Kate Curtis from Trader’s Way
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