AUD/JPY is making a reversal pattern on its 1-hour time frame, which means that the current downtrend could be turning.
The pair has formed a double bottom formation on the 91.00 major psychological level but the neckline at the 92.50 minor psychological resistance has yet to be broken.
Stochastic is in the overbought region, which means that the pair could dip a little lower before getting enough energy for a test of 92.50. From there, stronger buying pressure could eventually trigger a break of the neckline and the start of an uptrend.
http://www.tradersway.com/var/tw/storage/images/media/images/131003_audjpy2/20263-1-eng-US/131003_audjpy.jpg
The double bottom is 150 pips tall so the resulting breakout could be of the same size. Going long at market and aiming for the 92.50 mark then for 94.00 could yield a good reward to risk with a stop below 91.00.
By Kate Curtis from Trader’s Way