The AUD/JPY daily chart displays consecutive lower highs and lower lows with a potential short setup to continue the visible falling trend (supported also by downward trendline). The current corrective phase seems to be running out of steam in initiation of a potential impulsive phase, with the production of a bearish reversal price bar:
- ricocheting off a previous level at ~95.20;
- rejecting the 50% retracement level which is contiguous to 95.20;
- bouncing off and (most likely) closing below the 50 ema; and
- bumping into the falling trend line encountering resistance.
Convergence is observable on RSI and hidden divergence on Stochastic. Both Stochastic and RSI are in overbought territory and are ostensibly preparing for a reversal.
Entry - below the low of today's bearish reversal bar close
Stop loss - above the high of today's bearish reversal bar close
Target - first profit taking zone at previous low/swing low (91.75), and possibly lower at 91.00 if swing low violated
* Ignore the placement of the arrow indicating RSI convergence.
- ricocheting off a previous level at ~95.20;
- rejecting the 50% retracement level which is contiguous to 95.20;
- bouncing off and (most likely) closing below the 50 ema; and
- bumping into the falling trend line encountering resistance.
Convergence is observable on RSI and hidden divergence on Stochastic. Both Stochastic and RSI are in overbought territory and are ostensibly preparing for a reversal.
Entry - below the low of today's bearish reversal bar close
Stop loss - above the high of today's bearish reversal bar close
Target - first profit taking zone at previous low/swing low (91.75), and possibly lower at 91.00 if swing low violated
* Ignore the placement of the arrow indicating RSI convergence.