Most recently, currencies from the Antipodes are pretty strong. AUD and NZD are in the mid-term up trends on most of the pairs available on the market. In this piece, we will focus on the AUD/JPY, which yesterday gave us a proper buy signal.
It all started at the end of October, when the price created a double bottom formation on the horizontal support around 78.7. After this, the price reversed, ending the long-term down trend. On the 6th of November, AUD/JPY broke the mid-term down trendline (red) and after this, created a flag pattern (blue lines). Flag is a trend continuation formation, so the breakout to the upside was more expected by us. After defending the down trendline as a support twice, the price went higher aiming the upper line of the flag. The breakout happened yesterday and was relatively fast. That breakout, from the technical point of view, is a trigger to go long here.
Today, we do have a small reversal, which is absolutely normal. The buy signal is ON, as long as we stay above the upper line of the flag formation. The price going back below would be a bearish sign but this scenario is less likely to happen at the moment.
