AUD/JPY fell more than 500 pips last week
The best trade you could have made last week was an AUD/JPY short. The risk aversion that seemed to ebb late in the previous week made a comeback and this carry-sensitive cross paid the price.
Technically, it's a beautiful example of a retracement. When there is a dramatic call like on Monday Aug 24, there is so-often a bounce into the 50-61.8% retracement 'box'. And just-as-often, the bounce fades and the pair falls back and retests the spike low.
An unheralded part of technical analysis is seasonality. In the same way that chart patterns repeat, the patterns on the calendar occur time and time again. Both are things that 'shouldn't' happen in an efficient market but they do.
I specifically highlighted this pair in August as the best seasonal trade.
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