Is the trend my friend? Will oil prices continue to tumble? These are just some of the questions I gotta think about before taking this CAD/JPY forex trade. Tell me what you think of this one!
I’m seeing a descending trend line on the 1-hour forex chart of CAD/JPY, and it looks like the pair is ready for a quick pullback. Using the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the trend line and the 81.50 minor psychological level, which might be strong enough to push the pair back on a downtrend.
The upcoming BOC statement could be a good catalyst for a strong forex move, especially since a bunch of market watchers are expecting a rate cut. After all, the Canadian central bank did announce a couple of pre-emptive cuts early last year when oil prices had also been tumbling. Then again, the depreciating Canadian dollar might actually be enough reason for BOC Governor Poloz and his fellow policymakers to sit on their hands for now.
Either way, I’m thinking that the statement might still be a dovish one, as BOC officials might still decide to throw in a few cautious remarks here and there, so I’m keeping a bearish bias on CAD/JPY. Besides, it looks like we’re in for another risk-off week since Chinese data came in slightly below expectations today.
Here’s my plan:
Short CAD/JPY around 81.30-81.50, 200-pip stop loss, potential profit targets at 79.00 and 75.00. I plan on risking 0.25% of my account on this forex setup so make sure you check out our risk disclosure if you’re planning on joining me.
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