Monthly Strategy for AUD/JPY - Considerations When AUD/USD Falls Below 0.70 - [Relaxed Forex]

※This article is a reprint and revision of FX攻略.com February 2019 issue. Please note that the market information written in the body may differ from the current market.

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Yuttari Forex. Individual investor. A “slow trading” trader with extremely few trades. Studying daily with the aim of achieving great success in FX. Holds accounts with various FX companies and is familiar with a wide range of services within the industry.

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In the issue two months ago, in the “Monthly chart strategy for AUDUSD,” I wrote that if AUDUSD falls below 0.70, a possibility of reaching as low as 0.50 could be in sight. And in the previous issue, in “The Pitfalls of Repeater Orders,” I guided on money management to avoid overexposing positions with repeater orders.

Building on that, this time: if AUDUSD decisively falls below 0.70, what will happen to AUDJPY? If you are buying AUDJPY with repeater orders, inadequate money management could lead to a rapid forced liquidation.

Deriving AUDJPY from AUDUSD

Generally, to calculate a cross yen pair (a currency pair that combines a currency other than the yen with the yen), you multiply two currency rates of the dollar pair (USD-included currency pairs) (or you may divide). For example, as follows.

AUDJPY = AUDUSD × USDJPY

Looking at the right-hand side, AUDUSD has the dollar in the denominator. And in USDJPY, the dollar is in the numerator. Therefore, when you multiply, the dollar is canceled out, yielding AUDJPY.

The world’s base currency is the US dollar. Therefore, trades between the dollar and other currencies are active. On the other hand, currency pairs that do not include the dollar have fewer trades. Hence, by multiplying dollar cross rates, we determine cross-yen rates.