On its daily forex chart, AUD/JPY is testing the top of the rising channel with stochastic reflecting overbought conditions. Price might pull up for a test of the actual resistance around the 96.00 major psychological level before heading south.

If resistance holds, a selloff might last until the near term lows at the 93.00 major psychological level around the middle of the channel. A move lower could last until the bottom of the channel near the 90.00 mark. This could depend on the top-tier events from both Australia and Japan, with both the RBA and BOJ set to print their monetary policy meeting minutes.

Shorting at the 96.00 resistance with a 100-pip stop and a 300-pip target could yield a 3:1 trade and aiming for the 90.00 mark with a 600-pip target would improve the return-on-risk. Moving the stop to entry once price tests the middle of the channel can be a strategy to protect profits.

By Kate Curtis from Trader’s Way