For my first forex trade this quarter, I’m looking into hopping in the CAD/JPY uptrend on a retracement. What do you think of this setup?
As you can see from the pair’s 4-hour forex time frame, the uptrend has been pretty steady lately. Resistance at the 100.00 major psychological mark has held like a boss though, and price might retreat to the longer-term rising trend line or the area of interest around 96.00 and the 50% Fib.
Based on the forex calendar, there are a few event risks for tomorrow, namely the release of the BOJ minutes and tertiary industry activity index from Japan and the Canadian jobs report, so I’m expecting a bit of volatility then.
The Canadian dollar appears to be fundamentally stronger than the Japanese yen though, as recent inflation data from Canada have surprised to the upside and their economy follows the footsteps of the U.S., which is also doing pretty well. As for Japan, the latest set of reports have continued to disappoint, although the BOJ remains adamant that additional easing isn’t necessary for now.
I’m also thinking that the pickup in risk appetite, thanks to the Fed’s commitment to keep interest rates low for a “considerable time”, will keep the commodity currencies supported for now. Of course this depends on whether or not a fresh set of geopolitical risks pop up and start to weigh on higher-yielding currencies once more.
I’m keeping my eyes locked on this wide entry area (95.00 to 96.00) for now and I’ll probably wait for reversal candlesticks before setting actual buy orders. If I’m able to enter, I’ll be sure to set my stop below the rising trend line or the 94.50 minor psychological support level and I’ll be aiming for the previous highs at 100.00.
What do you guys think? As always, I’d love to get your feedback on my forex trade ideas!
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