BOC tightening expectations seem to be building up ahead of their rate statement this week, so I’m hopping in before the actual announcement.
Long CAD/JPY Trade
The Loonie was off to a strong start this week, even as crude oil was mostly unchanged, indicating that bulls are starting to price in expectations for a BOC hike.
More often than not, expectations for top-tier announcements like these tend to generate bigger moves while the actual event usually sparks profit-taking. I don’t really want to get left behind this time!
With that, I went long at market on another test of the 61.8% Fib just above the 86.00 major psychological mark. I’m even seeing a tiny double bottom reversal pattern that might form above the rising trend line and area of interest, too.
Stochastic is already on the move up to show a return in bullish momentum after forming a slight bullish divergence last week. I’m setting my sights on the swing high and 89.00 mark for my target and placing a stop below the trend line.Another factor that could boost the higher-yielding Loonie is the WTO review on whether or not U.S. steel and aluminum tariffs are legal. This is keeping traders hopeful that the trade measures can be lifted, possibly putting an end to the trade war and allowing commodity prices to recover.
Of course I’ll be watching this trade closely during the BOC announcement as any attempts to downplay their policy action might still spur a drop in CAD/JPY. Apart from that, I’ll also keep an eye out for any big swings in crude oil, too.
What do you guys think of my trade?
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