Trade Update: 2013-03-13 19:05
Good thing I decided to wait for this setup to play out!
I first had my doubts about the setup when CAD/JPY easily broke above the 92.00 handle that we were eyeing. Future BOJ Kuroda didn’t help either when he kept on talking about adding stimulus to the economy.
Then, last Friday Canada’s employment numbers came in waaay better than expected. The data alone invalidates my trade idea as I was actually expecting weak jobs figures for Canada. CAD/JPY ended up shooting to the area near the “head” and really invalidated our trade.
Dodged a bullet on this one. Phew. On to the next trade setup!
Trade Idea: 2013-03-07 7:55
I’m giving currency crosses another try with this short CAD/JPY trade idea of mine. I’m seeing a head and shoulders pattern forming on the 4-hour time frame but I haven’t decided where to jump in. The right shoulder hasn’t quite formed just yet and I’m using the Fibonacci retracement tool to figure out where the pair could turn.
It seems that the Fib levels lined up with psychological levels, which are usually respected by yen pairs. I’m considering two options:
1. Wait for a strong breakdown of the rising wedge pattern and short when the selloff gains momentum below the 91.00 handle.
2. Aim for a short entry at the 92.00 area, which is in line with a former support level, in case the pair edges higher. Of course, I’ll wait for reversal candlesticks to form first.
I’m keeping a short bias on this pair mostly because of the recent BOC and BOJ interest rate statements. While the BOC took a dovish tone and admitted that the Canadian economy can’t undergo rate hikes just yet, the BOJ talked about how the Japanese economy has “stopped weakening” during the past few months.
This represents a significant shift in the stances of both central banks as the BOC has usually been very hawkish while the BOJ previously favored aggressive monetary policy easing.
What about you? What are your thoughts on this pair?
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