Do you trade head and shoulders patterns?
CADJPY has re-tested weekly resistance and formed the reversal pattern.
Watch the video to find out why 81.30 could be the level that sellers re-enter the market.
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency analyst.
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In this video, we will take a look at CAD/JPY and why I’m looking to short from 81.30.
Looking at the weekly timeframe, we can see that last week the price rejected these previous structure highs where the market came before, then we found some selling pressure, and the price has returned to this level since.
The strength and weakness table was suggesting to us this week that we could see a reversal and the price to break to the downside.
Now, what’s quite nice about this is if we go into the four-hour timeframe, we can see that we’re at this resistance level, and the price has formed a head and shoulders pattern. We can see the left shoulder, the head, and the right shoulder, through here. Naturally, we have a neckline that runs through here. However, there’s an excellent level at 81.30. It’s a nice level because of all the market activity in this area recently, through here and here. So, I like the idea of getting short around this price to take the market lower down towards that 80.30 area.
If we look at the hourly timeframe, you can see in a lot more detail why I could like this area short. What we’ve seen is – let me draw that back. I’m sorry, I pressed the wrong button- what we’ve seen is the market reacts well to this level, through this area here. Support, resistance, support, support, support, support, even recently we’ve seen a little bit of a break and retest of that area. This area makes this quite nice to watch for short opportunities because of the amount of activity we’ve seen at this level. So, if the market does press into this, we could look to short from that level and move downwards.
Now, we’re looking to target the 80.30 area, which was quite a nice area. So, we can see that again, lots and lots of market activity going in around this point where we’ve had rejections, with support and resistance areas through here.
So, CAD/JPY is looking good. I would even be comfortable with taking a direct short around this area, placing our stop-loss — stop-loss is in a safe place.
So, keeping an eye on this one. It might be featured on the Blueberry Jam this evening and I’ll speak to you soon.
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