Update: AUDJPY (short) stop change
Our short on the AUDJPY, currently up 128 pips, is one that we’ve had to re-assess over the past day given the wave formation it’s traced out over the past week.
Currently, momentum in USDJPY is strongly bullish while momentum in AUDUSD is slightly bearish, giving a net bullish momentum bias to AUDJPY. Moreover, the 8H chart suggests we may be in the second half of wave D of a large triangle that began in November 2011. If this is the case, we would expect price to rise as high as 84.70 (the point at which wave triangle wave D equals 61.8% of triangle wave B) or even 88 (the top triangle trendline). Wave C travelled 80% of the distance travelled by Wave A, so this pair could still have quite a distance to go before heading south in wave E of the triangle (which we tentatively plot in the 75-76 area).
On the 2H chart, a bullish interpretation says that we may be preparing to blast higher in wave 3 of c of D, which would take us over 82.50 and into negative territory for our current short.
Summary: Move stops to 81.78. This gives us a minimum 29-pip gain on this pair and will protect us from a take-off a few hundred pips higher. Should price reach 84-88, it may be time to re-enter this trade. However, because 1H momentum has yet to turn bullish, we will stay in this trade for the time being.
saigonfx 