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AUD/JPY has been showing some form of resistance around the ¥87.50-¥87.70 area since mid-December. Price action has made a few different attempts to overtake this level, each of which have failed. This is an interesting zone of resistance as ¥87.50 is a major psychological level and ¥87.70 is a confluent Fibonacci level as the 61.8% retracement of the ‘big picture’ major move (taking the 2007 high down to the 2008 low) as well as the 50% retracement of the most recent major move, taking the 2014 high down to the 2016 low.

Short AUD/JPY at Market

Chart prepared by James Stanley

Stops on the position can be adjusted to ¥88.34 to get risk levels outside of the February high. This would be approximately 125 pips of risk with current price action. Profit targets can be set to ¥85.50, ¥84.10 and then ¥82.50. The first profit target is approximately 160 pips away from current price action to afford a 1.28:1 risk-reward ratio; and if this target comes into-play, stops will be adjusted to break-even on the remainder of the position.

Short AUD/JPY at Market

Chart prepared by James Stanley

--- Written by James Stanley, Analyst for DailyFX.com

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