The price of CADJPY is trading within a key consolidative pattern, could the price break higher?
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The Bank of Canada is forecasted to hike interest rates this week by 75bps, this could see the price of CADJPY break out of its current consolidative pattern. When an interest rate hike is forecasted we can often see the move already priced in, this means that the bullish move from the hawkish tone could be done. The Bank of Japan is not going to increase interest rates any time soon which could leave the currency open to a further sell off. This could see the price of CADJPY break higher in theory.
The price technically is in a consolidative pattern, the pair is making higher lows and lower highs forming a triangle pattern. These types of patterns can be very predictable when trading the market because you can look to trade from one side to the other. If we look at what happened before, the market rallied higher and formed a consolidative pattern, then the price broke higher. This could happen again if the market considers the Canadian Dollar stronger than the Japanese Yen.
Whilst the pattern remains we can look for opportunities now the price is at the high. Going down to the 4hr time frame we can see sellers entered the market at the key highs, this area could see selling pressure form again. If the price rejects and forms bearish price action we could expect the price to trade to the other side of the pattern.
Did you see our Week Ahead Analysis video? You can watch it here…
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