Market highlights from the past week

Friday, July 3: coronavirus concerns remained a significant factor with reports that the border between the Australian states of New South Wales and Victoria would be closed.

Monday, July 6: risk appetite held firm on Monday as stronger than expected US data bolstered recovery expectations.

Tuesday, July 7: according to sources, the Bank of Japan is not likely to make significant monetary policy changes at next week’s policy decision.

Wednesday, July 8: Bank of Japan Governor Haruhiko Kuroda stated that the bank will not hesitate to add further easing if the economy is in an extremely severe state.

Thursday, July 9: risk conditions were more fragile on Thursday amid global coronavirus unease, with a focus on US developments as new cases again rose above 60,000.

AUD/JPY price analysis

Let us have a look at the technical viewpoint: 

Monthly: traded to a multiyear low of 59.87 in March. We have seen a 28 per cent recovery from the base to the June high (76.79).

Weekly: levels close to the previous swing of 76.54 (week of December 23, 2019) found sellers. We have posted inside candles for the past three weeks, highlighting indecision. Previous support is located at 69.95 (week of August 24).

Daily: impulsive move down from the 76.79 high. Mixed and volatile trading for the past 19 (trading) days. This is common in corrective formations. 

Intraday four-hour: levels close to the 61.8 per cent Fibonacci level of 75.00 found sellers (from 76.54-72.53). The trend of higher lows has now been broken. Reverse trend resistance is seen at 74.40. We have a previous swing high at 74.42.

Outlook: impulsive move to the downside. Reverse trend resistance should cap any corrective buying pressure.

Possible trade setup: 

Action: selling a 74.40 (reverse trendline)

Stop: 75.20 (above the swing high)

Target: 70.00 (swing low) 

Potential return on risk to first target:  R5.5 (reward 440 / risk 80)

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