The most interesting things about AUD/JPY

Introduction

There is nothing extraordinary in the fact that the trades on markets happen at the same time. However, we have a remarkable instrument that is traded at the same time with itself, but overnight with the other ones. So, it is unusual because we are used to asses it overnight.

Today in our watchlist we have a western trader of the eastern hemisphere and a rising sun trader of AUD/JPY.

Basic arguments

Despite the fact that these currencies have quite close relationships and the trades with them take place almost at the same time (because the time difference is only 1 hour), it means that there is no time lag between the assessments of currency ratio. Such a situation with interest rates allows Australia to get a more profitable position (from the point of view of investment attractiveness), which should stimulate the AUD price. Both central banks decided to keep the interest rate unchanged, so the positive dynamics of the AUD will persist. However, we believe that the fair rate now is around 77.67 AUD/JPY, which is significantly lower than the current rate of 78.52 AUD/JPY.

Technical arguments

Picture 1. The price chart of AUD/JPY for the period of 31.03.2019 - 30.04.2019 with the resistance line at the level of 79.79 AUD/JPY.

As we can see in picture 1, the AUD/JPY price at 30.04.2019 is around 78,5 AUD per yen. Also, we can see quite a good downward trend, which will develop in the future. Another important thing is that the price recently was around the resistance line (It is marked with red. As we can see it did not pass it through).

Big traders positions

Picture 2. The price of AUD/JPY and the index of big traders for the period of 31.03.2019 - 30.04.2019.

As we can see in picture 2, the current situation on the index looks like a growth of the JPY positions, which indicates that the market aims to the equilibrium rate after a light correction.

Forecast

In the current situation, we recommend investing "lower". However, we also advise to smooth it by making 3 investments "lower" and 2 "upper".

Recommendation:

In this situation when we expect the trend, the most useful for trading will be such trend indicators as ROC, Moving Average, RSI, which will allow you to invest in the appropriate direction.