Technical Sentiment: Bullish
Key Takeaways
CAD/JPY stayed bullish even through a major downswing from 99.81 down to 92.89, respecting a higher high – higher low swing configuration. This allowed the pair to bounce back and we are now seeing traders eye a fresh multi-year Higher High.
Technical Analysis
Apparently there is nothing that can stop CAD/JPY from rallying even higher. Last week price closed above 101.04, where many were expecting some kind of temporary correction off 2013’s high. A bounce failed to materialize and buying momentum simply ate through all the sell orders placed in this area. On Tuesday the Japanese Yen tripped even lower on disappointing data, allowing a strong rally +120 pip rally. This helped the pair consolidate above resistance, paving the way for future gains as the pair enters uncharted territory since 2008.
Stochastic is showing overbought conditions on all timeframes from 4H all the way up to Monthly. This suggests a major correction is around the corner, however with price action heavily skewered towards fresh gains, we will stick to long positions until a bearish signal appears.
Free Reports:
Towards the downside, albeit already at a decent distance, 101.04 is the primary support level to be watched. A return below this level should warn traders of deeper correction potential, while a bounce will suggest uptrend continuation.
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Prepared by Alex, Currency Strategist at Capital Trust Markets