#CADJPY trend could continue higher after a recent breakout.
But will the currency pair provide a trend trading opportunity?
Watch the video to find out more…
Today, we’re going to look at CAD/JPY as there could be an opportunity forming on the market.
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The CA Dollar has been one of the weakest currencies lately. However, the Bank of Canada came out hawkish in their statements last week, suggesting that the economy was performing better than they thought. That led to a lot of CA Dollar buying.
If the economy is good, then it is likely that central banks will hike interest rates. That’s why the currency will be bought by investors.
But, it doesn’t necessarily mean that the interest rates will surely hike; it just means that there is a high probability of it happening.
I don’t think they will during the pandemic, but when we get to the other side – hopefully, soon – then we could see potential for higher interest rates in some countries.
In the weekly timeframe, we already broke through the weekly high. When the market breaks a weekly high or low, the market usually moves in that direction.
So, to see this price breaking through last week’s high suggests that sellers are not really too involved at the moment. We’ll probably see more buying on the go.
CAD/JPY on the weekly timeframe is suggesting that the market may trend higher. Last week’s bearish candlestick high was broken through today’s session. This typically leads to a move higher.
If we go to the daily timeframe, I’d look for areas where the market may retest.
We have a bit of a supply area because when the price got to 87-89, the market moved away from it quite aggressively to the downside.
You can see how strong the market rallied into these areas with a bullish candlestick. It then reversed after a couple of consolidation days and saw the market move lower. So, I would expect prices to move back towards the 87-89 area.
If I go down to the four-hour timeframe, 87.98 is the most traded level within this consolidation pattern. That tells me that the price will likely do something if it gets back to this point – either it sells off or breaks through and trades to the upside.
What’s interesting is that we had a change of trend and now, the market is making higher highs. That means that we could see trend continuation forming. The price is heading back down into this consolidation and would rally to the upside.
Now, 86.48 is the most traded level within this particular consolidation. So, I would be looking for the price to pull back to 86.48, then look for long opportunities towards 87.98.
Going down to the four-hour chart, we can see that the market consolidated before sellers took over the market. Within this consolidation, the most traded level was 87.98. This could act as resistance if the price were to reach this level, making it good for targets.
The recent price action shows that we made a new higher high, telling us that the trend will likely see prices move higher. Within the last consolidation, the most traded level was 86.48. This would be an ideal place to see buyers step back into the market for a trend trading opportunity.
So that’s what I’m going to be looking for here on CAD/JPY.
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