I’m seeing this simple reversal pattern on the 4-hour chart of CAD/JPY ahead of the release of Canada’s jobs report.
Think we’ll see a breakout?
Don’t look now, but CAD/JPY is already testing the neckline of its double top pattern on the 4-hour chart!Breaking below this support could set off a drop that’s at the same height as the reversal formation, which spans roughly 150 pips. Technical indicators, however, suggest that support is more likely to hold than to break.
The 100 SMA is above the 200 SMA to signal that bullish momentum is present while Stochastic is pulling up from the oversold region. In that case, CAD/JPY might still have a shot at bouncing back up to the resistance at 88.00 again.
This could all boil down to the outcome of the Canadian jobs report, which is expected to post a 101.5K gain in hiring for March. This would be slower than the earlier increase of 259.2K but still enough to bring the jobless rate down from 8.2% to 8.0%.
Much weaker than expected results could lead to a drop below the neckline support and a reversal from the earlier uptrend. On the other hand, an upside surprise as hinted at by the stronger-than-expected March Ivey PMI would allow Loonie bulls to defend the 86.50 support level.
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