AUD/JPY pair moved last week as expected, where we mentioned that a bullish correction is around the corner.
The currency pair seems to have indeed started an ABC corrective pattern so more correction could be expected.
This article will discuss the wave perpective and expected scenarios for the pair during the coming days using wave pattern, support, and resistance and SWAT software.
AUD/JPY Wave A is in Progress
Lets make a recap of what is going on with the AUD/JPY pair. The currency pair seems to have completed 5 bearish waves and now is making a potential corrective wave A.
Price could still expand this wave A via a potential 12345 pattern… or price has already completed it. In the latter case, a bearish wave B and bullish wave C are expected.
So as a conclusion I expect more for the upside and I am looking for buy opportunity only to match the expected wave pattern, and the next paragraph will discuss the best entry points by using SWAT software.
AUD/JPY Daily SWAT Chart Indicates Divergence
A divergence pattern is visible on the daily chart between the two most recent bottoms, which is often an indicatation of a potential reversal.
AUD/JPY SWAT 4 Hour Chart
Now its time to use SWAT 4 hours chart to determine the entry points according to the expected wave pattern and here are the conclusions to take care of :
- There is a good space between the 21EMA and 144 EMA, which means that its acceptable to look for a break of the 21 EMA.
- Also, the break of the red trend line is a must.
- For more confirmation waiting for the price to break the Wizz level 3.
- The expected target is Wizz level 4 around 82.80.
- So before trading this pair traders must wait for the above confirmation to appear.
The alternative is that price will build a bearish retracement instead. A bullish bounce at Wizz level 1 or 2 could indicate the end of wave B and a potential start of wave C. A bearish breakout below the bottom would invalidate a larger bullish correction.