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Aussie – The Strongest this Morning

Market Analysis

AUDJPY, Daily

The Aussie dollar is trading higher today, carving out a 3-day high against the yen at 87.95 currently.  The gain marks a correction following a week-long phase of underperformance, which was catalysed by unexpected weakness in the Q3 CPI report. Strong gains in metal and other commodity prices, along with buoyant global stock markets, have been giving the relatively high beta Australian dollar a lift. Nevertheless, last night’s increase of surplus seen in Australian trade balance, along with a rise up to 1.5% on Building permits, gave a strong Push on Aussie.

The AUSUSD climbed up to 0.7725 breaking the 200-Day MA. Meanwhile AUDJPY reach up to 87.80 on the data announcement.

Technically, AUDJPY still looks to be in a down trend, which has been in play September 21. Meanwhile, the yen is under pressure amid a risk-on tone in global markets and with the recent election in Japan having reaffirming a political preference for ultra-accommodative policy.

On yesterday’s closing however, a proper Hammer candlestick formation was confirmed, since on Tuesday,  despite the long down wick, the Daily candle closed bullishly in the Dropping Market, while yesterday a strong full Body bullish candle was also formed. Such pattern suggest that Downwards movement ran out of steam and hence a reversal to the upwards might occur. Furthermore, the pair manage to break today, the 20-Day MA to the particular chart, by crossing with this way towards the upper Bollinger Bands pattern.

Hence a Long entry was taken at the 20-Day MA which is at 87.85, with Targets at the 50.0 and 61.8 Fibonacci level, at 88.50 and 88.90 respectively. the 50.0 Fibonacci level is also a confluence of a down Trend-line drawn since September 21. Support was set at the recent 87.10 and at month’s low at  86.70.

 

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Andria Pichidi

Market Analyst

HotForex

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