G20 To Break AUD/JPY Out Of Compression?

Share On Facebook
share on Linkedin
Print

Markets have all but come to a halt ahead of this year’s G20 summit, where eyes firmly fixated on the Trump-Xi meeting, as it could mark the difference between risk-on and risk-off next week.

It’s likely that larger market moves could materialise if Trump and Xi fail to reach an agreement on trade. That said, market could also breathe a sigh of relief if they strike a deal which could provide tailwinds for risk-assets next week. Either way, we may have gaps to contend with which makes it debatable as to whether one wants to hold positions over the weekend.

For currency traders the Yen and Swissy pairs are likely to see the most action, although we’ll focus on AUD/JPY today as it is widely regarded as the currency barometer of risk.  After gaining over 1.5% this week already, markets appear to be favouring a successful meeting, yet we could see nasty reversal if expectations are not met.

Looking at the daily chart we can see bullish momentum has been the dominant force since the hammer low at 78.56. Having recently broken out of a corrective channel the bias is for a bullish continuation, although a Rikshaw Man Doji warns of a hesitancy to break higher.

 

Still, with the market currently under compression it provides clear breakout levels for two scenarios over the near-term; a break above 83.26 signals a bullish continuation, whereas a break beneath the Doji low (82.74) signals a near-term reversal. Although, as the trend remains bullish above 81.19, we’d see a downside break as more likely to be part of a correction as opposed to a reversal from its highs.

For now, we’re focusing on the 83.94 and 84.54 as interim resistance levels, with a break of the latter opening-up a run for the Jan low at 87.21. Interestingly, if we’re to see a repeat of the first leg from the 78.56 low, it could be trading at those dizzy heights in 2-weeks.

 

Faraday Research offers real time FX and Equity trade signals from qualified analysts. Click here to try us free.

 

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20210920 16:57:04