Checking out the Loonie once again for today’s watchlist post, this time against the yen as a classical technical pattern appears in the short-term. Will volatility stay bid to keep the momentum going?
Before moving on, ICYMI, we’ve started doing a Daily London Session Watch list! And today, we looked at an opportunity forming on GBP/NZD to play the ongoing pickup in risk aversion stemming from the U.S.-China conflict, so be sure to check that out. For all you traders out there who trade the London session, be sure to check out the site daily for the latest news updates and pairs that could be on the move for the session!
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 13154.75 -0.50% FTSE: 7249.96 -1.01% S&P 500: 3115.79 -0.14% DJIA: 27851.72 -0.29% |
US 10-yr 1.748% -0.038 Bund 10-YR -0.352% -0.011 UK 10-YR: 0.718% -0.017 JPN 10-YR: -0.0354% -0.013 |
Oil: 55.68 +0.85% Gold: 1471.60 -0.18% Bitcoin: 8103.79 -0.03% Etherium: 175.25 -0.08% |
Fresh Market Headlines & Economic Data:
- Oil prices rise on Middle East tensions but trade tensions weigh
- Weekly mortgage applications fall despite rates crossing back below 4%
- U.S. diplomat Sondland says he ‘followed the president’s orders’ on Ukraine
- Canadian inflation holds steady at 1.9% in October, remains on target
- Boris Johnson wins by a nose in Britain’s unsatisfying election debate
- UK’s Johnson raises prospect of 10 billion pound payroll tax cut
- Excessive risk-taking and falling bank profitability cloud euro zone’s growth, ECB says
- Euro area financial stability environment remains challenging
- Euro zone experiencing protracted weak growth – ECB’s Makhlouf
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- ECB Lane speaks at 5:00 pm GMT
- FOMC Meeting minutes at 7:00 pm GMT
- Japan Foreign investments at 11:50 pm GMT
- Japan All Industry activity index at 4:30 am GMT (Nov. 21)
What to Watch: CAD/JPY
Even with the latest FOMC meeting minutes coming up, we’re not seeing a big potential for a volatility pop through the next couple of sessions. So, going with the current driving themes seems like a logical play, and today more U.S.-China tensions and a ho-hum Canadian inflation update seems like a great place to start. With risk aversion likely to hold for the rest of the session, and Canadian inflation not giving us a reason to change the probabilities of the BOC making a policy move one way or another, the technical setup on CAD/JPY is very interesting for a short-term play.
On the one hour chart above, we can see that forex traders recently swung the pair lower, moving from 82.50 down to 81.50 where the buyers took control. It’s bounce in today’s session, but may be encountering resistance at the Fibonacci retracment area at the moment. Stochastic has not yet indicated over bought conditions, so there may be a little bit of a bounce ahead before sellers take control.
The odds are currently in favor of the bears if the Fib area holds, and with a daily ATR of around 50 – 55 pips, the potential R:R is favorable if targeting below the recent swing low around 81.40. Of course, that potential R:R rises if going more conservative with the entry, like waiting for a bounce higher to the 50% – 61% Fib area.
For the bulls, it’s a tough case to make at the moment with global risk sentiment in negative at the moment, but if that shifts (i.e, a turn in U.S.-China trade relations) then a break above the Fib area may draw in buyers and looking at the major psychological level of 82.00 could give a solid potential R:R if using the daily ATR as an exit guide.