So far so good on my CAD/JPY trade, but I hope I’m not jinxing it! I do wish I was able to catch a better price now that I’m seeing this channel formation.
Long CAD/JPY Trade
In my original trade idea, I had been waiting for a retest of the broken ascending triangle top to catch a long CAD/JPY position. This lined up nicely with the 86.00 handle, so I jumped in when the area of interest held.
Price dipped slightly below that support zone in the days that followed, but fortunately I was able to set a wide enough stop. It turns out that the pair is also moving inside an ascending channel better seen on the daily time frame.
More bulls were likely waiting around the channel bottom closer to 85.00, so a stronger bounce happened right there. Price is now back above my entry, and I’m hoping that I can roll my stop higher to reduce my risk soon.
I’ll probably do that once the pair is able to clear the barrier at the mid-channel area of interest around 87.50 to 88.00. Stochastic is still on the move up, after all, so bulls have energy to push for more gains.
Besides, risk appetite seems to be returning to the markets now that most of the geopolitical risks like the U.S. elections are fading into the background. Because of that, the lower-yielding yen has been losing ground to the rest of its higher-yielding peers like the Loonie.
There seem to be no major event risks for both the Canadian currency and the Japanese yen this week and the next, so I’m keeping my fingers crossed that the current trend could carry on. Of course I’ll be keeping close tabs on crude oil prices to gauge if any declines in the oil-related Loonie might follow, but it looks like the correlation hasn’t been holding up anyway.
Are you guys seeing any potential factors that could break this uptrend?
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