AUD/JPY is showing signs of a reversal from its recent downtrend as it made an upside breakout from the neckline of its double bottom pattern on the daily time frame.
The pair busted above the 90.50 handle in today’s Asian session as the Australian economy reported a stronger than expected GDP reading for the second quarter of the year. As for Japan, Abe’s proposed sales tax could undermine spending and growth, and might prompt further easing from the BOJ.
The pattern is roughly 400 pips in height, which suggests that the rally could last for around 400 pips as well. If that’s the case, AUD/JPY could reach the next resistance at 94.00. A stop of 150 to 200 pips would yield a 2:1 reward-to-risk on this trade.
By Kate Curtis from Trader’s Way