The Australian dollar appears to be still rallying strongly from Wednesday’s employment beat and technical signals. The Australian economy is showing signs of improvement with business sentiment rising and the labor market appears poised to have the best job growth year since 2010. The Australian Bureau of Statistics announced that October saw employment increase by 58,600 to 11,838,200 total employed. Fulltime increased by 40,000 and part-time employment increased 18,600. The unemployment remained steady at 6.1%.
The AUD/JPY daily chart displays the longer-term bearish trend made a key low at 82.02 and formed a bullish ABCD pattern on August 24th. Price has since stabilized and recaptured the 50-day SMA. The recent employment data also helped price surge above a heavily tested resistance level. If bullishness continues, we could see the price rise and initially target the 88.09 level and eventually the psychological 90.00 handle.
If we see a return to the downside, initial support may come from the 50-day SMA, which currently trades at the 86.02 level. Deeper support may come from the 84.00 handle.
The trade: Buy AUD/JPY at 87.25, with a stop loss at 86.25 and take profit at 90.25. The risk/reward ratio is 1:3