Trading AUD/JPY? You Better Have an Opinion on The S&P’s Too

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Good Saturday afternoon from rainy and cold Bend Oregon – perfect weather to do some analysis/work from a coffee shop.

I received this question from André in Lisbon Portugal.

What is the relationship between AUD/JPY and S&P? 

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Thanks for the question André.

The yen crosses are normally rather binary when it comes to the S&P’s. Strong S&P’s = Stronger XXX/JPY and vice versa.

Now, as you likely have seen in my recent comments, the S&P’s are as clear as mud in here. However, the close below 2128-2130 over the last 2 days suggests we could head towards 2060.

10-15-16spupdate

As the chart below shows AUD/JPY tracks pretty well with the S&P’s.

So, given this relationship, I am a bit hesitant to get long AUD/JPY, for now at least.

Yes, as I noted in yesterday’s commentary, prices have pulled back to the forecast Fib support Zone (FSZ) but that is where technical analysis leaves a blind spot.

1015-16audjpyupdate

If you are only looking at technicals and not looking at how related markets impact the instrument you are looking to trade, you are going to get blindsided….a lot.

Hope that helps,

Dave

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