Review of the CADJPY Bullish bias

Review of the CADJPY Bullish bias

By: James Ansher | Where To Trade | On:22-10-2014 10:31
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Key Highlights

  • 800 pip multi-week range unbroken
  • Major Price rejection at 99.8
  • Major Support and resistance levels

 

CADJPY

From the Weekly chart, we can see that the CADJPY has been moving sideways since it hit resistance at 101.08 on May of this year. We have been caught in a 900 pip range with the lower bound being at 91.00.and the upper bound at the 99.00 level.

Over the last three week, as the risk aversion took on, we saw the strengthening of the JPY against other major pairs. During that period, the USDJPY for instance had a 200 pip fall that is still continuing this week; we have opened with a bearish weekly candle. The CADJPY on the other hand has shown quite a bit of resilience as we failed to break below the 92.89 level. We have had 250 pip price rejection from the two week bottom at 92.80. This is less than 200 pips below the outer bound of the 900 pip range.

 

Major support and resistance levels

Support levels

  • The first major support is last week’s low at 92.98 which is about 150 pips below.
  • The next major support is the 94.00 major level
  • The furthest  major support is the 91.00 level which is also the outer bound of the range

Resistance levels

  • The fist resistance is at 97.00 major level
  • The next resistance is at 96.22 which is Junes high
  • The furthest resistance is at 99.80 which is also the outer bound of the range

 

Technical indicators

Monthly Chart

The monthly chart for the CADJPY displays very typical ranging market symptoms where the moving averages fail to catch the major moves. We however take notice that bullish cross that took place in 2012 for the pair has not reversed despite the apparent narrowing of the distance between the two moving averages. Technically, this means that the uptrend is viable. The fact that both moving averages have touched the prices should however serve as a bearish warning that the price may change the long term direction.

Both the Stochastic at 61.00 and the RSI at 56.00 indicate that we are at neutral conditions at this time frame.

 

Where To Trade - CADJPY Monthly 22-10-2014

 

Weekly Chart

The weekly chart gives an interesting reading, while the 14 period and 21 period moving averages maintain their bullish cross, they have both touched the prices and could potentially close above he prices should the current candle close.  In order to determine the real reading at this time frame, we must wait for the current candle to close.  We should however notice that price have maintained a bullish bias given that Augusts low is well below last week’s low and also that moving averages have maintained their bullish cross.

In this timeframe, the stochastic and the RSI are both indicating neutral conditions at 25.00 and 49.6 respectively.

 

Where To Trade - CADJPY Weekly 22-10-2014

 

Daily chart

From the daily chart, the 14 period and 21 period moving averages have made a bearish cross. They are both trading well above the prices. This indicates that the bearish momentum in the short term is quite strong. The bears should therefore dominate the prices in the short term.

The stochastic reading 85.00 at this time frame indicates that we are at over bought conditions. We should therefore expect the price to resume its bearish slide downward.  The RSI is giving a neutral reading at 41.6.

 

Where To Trade - CADJPY Daily 22-10-2014

 

Wrap up

Even though the CADJPY is maintaining its bearish momentum in the long run, we think that this is a great time to take profits from the long CADJPY trades. The monthly time frame is just about to have a bearish moving average cross and we may have a break below the current range.

In the short term however a great trading approach is to go short the pair when the prices touch the 21 period moving average.

James Ansher

James Ansher

When there is a will there is a trade

A successful Forex trader and expert advisor

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