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I’m checking out CAD/JPY this week as we may see some action for the Loonie with the Canadian jobs update coming soon.

Will the event bring buyers back to the uptrend or give sellers control to break lower? 

CAD/JPY Uptrend Pullback?

CAD/JPY 1-Hour Forex Chart
CAD/JPY 1-Hour Forex Chart

This week, I’m taking a look at the price action in CAD/JPY, which is basically in a slow trend higher and has clearly defined levels of interest.

The 79.00 major psychological handle has been a clear level where traders have both played it as resistance and support, and we can see a pretty uniform pattern of higher ‘lows’ on the chart.

I see a retest in this area as a potential trading opportunity, but the directional bias will likely depend on the upcoming Canadian employment update on Friday. Expectations are for another gain in September, but at a lower rate (around 150K) than the August read of 246K jobs.

This may not be a bad thing though because as we saw in September, the Loonie rallied despite the number coming in below both expectations and the July read of 419K jobs  added.

This suggests that if we continue to see positive net additions and if the broad risk sentiment environment remains positive, the Canadian dollar has a good chance of rallying once again.

And the odds are even greater if oil moves higher this week, and we see a positive read from tomorrow’s Canadian Ivey PMI number.

So, that’s the scenario I’m looking for to have a long bias this week, and of course, I will also look for a retest of the rising trend line, marked on the one-hour chart above. If retested and we see the scenario above play out with bullish reversal price patterns, then I will look to go long for a short-term trade.

If the opposite scenario plays out where the Canadian employment numbers come in below the previous read/expectations, and broad risk sentiment is negative, then I will look for a momentum break of the rising ‘lows’ to create a short-term short position on CAD/JPY.

That’s it for now…so what do you all think? Are you watching CAD/JPY for a potential trade? If so, what’s your directional bias and entry strategy? Let me know in the comments section below!

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