CAD/JPY finally completed that reversal chart pattern I was waiting for last week so I’m planning on setting my entry orders on this one. What do you guys think?
In case you missed it, I wrote a trade watchlist blog post on CAD/JPY’s double top formation on the 4-hour time frame but wanted to wait for the actual test of the neckline support at 86.00 before placing any orders. At that time, market watchers were having doubts about the impact of the OPEC deal on crude oil prices as stockpiles and rig counts have been rising in the U.S. and keeping oversupply concerns in play.
Another factor that contributed to the Loonie’s slide was the BOC statement, which turned out more dovish than expected. Instead of highlighting the pickup in oil prices and its positive effect on the Canadian economy, BOC Governor Poloz turned the spotlight on uncertainties stemming from the Trump administration and downside risks from CAD appreciation.
In contrast, the yen has been able to take advantage of “Trump jitters” as it has been taking the Greenback’s share of safe-haven flows. Besides, traders seem to be showing more love for the Japanese currency after the BOJ upgraded their growth forecasts in their recent policy statement.
I’m still expecting a lot of tossing and turning leading up to Trump’s inauguration so I’ll refrain from setting orders ahead of the weekend. I’ve already identified my entry and exit levels, but I’ll put these in by the market open on Monday… depending on where CAD/JPY is trading around that time, of course.
I’m planning on shorting below the 86.00 mark with a stop close to the highs and just slightly above 88.00. For my initial PT, I’ll aim for 250 pips, which is roughly the same height as the chart formation, but I’ll be ready to make some adjustments if price shows stronger bearish momentum on track towards the longer-term lows at 76.00.
Don’t forget to check out our risk disclosure if you’re trading this one, too!
See also: Q4 2016 Trading Performance Review
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.