The Loonie continues to draw support from upbeat Canadian fundamentals, higher crude oil prices, and an overall improvement in sentiment.
Check out this reversal pattern confirmation I’m looking at!
Fresh Market Headlines & Economic Data:
- China reported 5K increase in new coronavirus cases, new confirmed cases outside of Hubei down for 10th consecutive day
- Japan reported first coronavirus fatality
- Japanese economics minister and senior BOJ official expect sharp contraction in Q4 GDP
- Asian shares tick higher on virus containment hopes
- New Zealand Business NZ manufacturing index up from 49.2 to 49.6
- New Zealand food prices rebound by 2.1% after earlier 0.2% dip
Upcoming Potential Catalysts on the Forex Calendar:
- German preliminary GDP at 7:00 am GMT
- Swiss PPI at 7:30 am GMT
- Euro zone flash employment change and flash GDP at 8:00 am GMT
- U.S. retail sales at 1:30 pm GMT
What to Watch: CAD/JPY
Risk appetite appears to have improved somewhat during the Asian session, and the Loonie has been the strongest among the comdoll bunch.This is likely because the commodity currency is drawing support from upbeat Canadian data and a pickup in crude oil as well. After all, there are speculations that the OPEC could be mulling an increase in output cuts or at least an extension of their agreement in order to prop prices up.
On the flip side, the safe-haven yen is losing ground to risk-on flows while also facing the possibility of a Q4 GDP contraction.
With that, I’m looking at this inverted head and shoulders breakout on CAD/JPY, especially since the pair appears to be making a retest of the broken neckline.
If you think that this reversal is about to gain traction from here, hopping in at market with a stop that’s enough to weather the pair’s average daily volatility could be a good play.
Just be careful if you plan on keeping this trade open over the weekend, as price gaps typically occur depending on headlines then!