This pair’s short-term rising trend line has been holding like a boss so I’m hoping to catch a quick pullback and join the climb. Here’s my CAD/JPY trade idea.
Long CAD/JPY Setup
Cyclopip has had his eye locked on the pair’s rising trend line for quite some time and he made quite a killing on his recent long trade, so I’m looking to get a piece of the action as well. Price is already starting to pull back from its recent surge so I used the handy-dandy Fib tool to look for potential entry levels.
The 61.8% Fibonacci retracement level coincides with the trend line around the 86.70 area, but I’m thinking that the higher Fibs might already keep losses in check. After all, a bullish divergence is materializing as price made higher lows while stochastic had lower lows.
I haven’t set any actual entry orders yet since I plan on waiting to see how price reacts to the 86.70-87.00 area first. There’s not much in the way of top-tier reports from Canada or Japan this week so the major source of volatility might be the FOMC statement. The announcement could do a number on USD/JPY, which might then carry on to CAD/JPY price action especially if Yellen drops some hints on keeping rates unchanged for the next twelve months or so.
I’ll refrain from going long around the short-term trend line if long red candles form during the FOMC announcement, but I’m keeping a bullish bias on the Loonie because of last month’s OPEC output deal and the support from non-OPEC oil producers. The resulting pickup in crude oil prices could give a much-needed boost to Canada’s energy sector, contributing to business investment and employment down the line. I guess I’ll just have to watch out for larger corrections on the longer-term charts if price breaks below these Fibs.
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See also: Q3 2016 Trading Performance Review
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