I’m seeing some reversal candles on the long-term CAD/JPY area of interest, so it might be time to catch a bounce. Here’s what I’m talking about!
Long CAD/JPY Idea
Remember that large ascending triangle breakout on the daily time frame of CAD/JPY? Well, price is making a retest of the broken triangle top, which might hold as support from now on.
Not only does it line up with the 61.8% Fibonacci retracement level, but it also coincides with the 86.00 major psychological mark. To top it all off, I’m seeing a bullish divergence, too!
If support holds, CAD/JPY could make its way back up to the swing high and beyond. The chart pattern is around 500 pips in height, which means that the resulting rally could be of the same size.
I’ve got a bullish Loonie bias thanks to rising crude oil prices and stronger BOC hike expectations, especially after the central bank’s Business Outlook Survey results were printed. Policymakers are set to meet later this month and market watchers appear to be pricing in a 0.25% rate hike.
However, I’m worried that a larger dip to the very bottom of the triangle might also be in the works, probably if risk aversion stays in play for a few days more. After all, the yen has been one of the bigger beneficiaries of risk-off flows while the higher-yielding Loonie tends to slide in these cases.
With that, I’ll probably wait for more confirmation on these hesitation candles around the area of interest before hopping in. Stay tuned!
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