CADJPY Forex Analysis: The CAD/JPY pair continued its upward moves inside the daily Ichimoku cloud on Monday as market participants waited for a speech from Bank of Canada Governor Stephen Poloz. Here is the IDDA approach to strategy development for the CADJPY pair, for those who are looking to take advantage of the high-risk event to earn some pips.
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CADJPY Forex Analysis – Technical Points
The first point of the IDDA focuses on technical analysis. After forming a morning star candlestick chart pattern on the daily time-frame last week, the pair entered the flattening Ichimoku cloud. The resistance levels are set at the upper band of the cloud and October’s high at 90 and 91.23 respectively.
The Tenkan Line and the Kijun Line are both moving down on the Ichimoku Kinko Hyo‘s daily setup.
The key pivot price is set at the 23% Fibonacci retracement level at 88.82. This Fibonacci setup retraces the most recent CADJPY uptrend from the lows of 81 back in June 2017, to the highs of 91.23 in October. The next pivot point for CADJPY forex analysis is at the 38% Fibonacci level of 87.30.
Learn about Ichimoku – Fibonacci Strategy Development
CADJPY Forex Analysis – Fundamental Points
The second point of the IDDA focuses on fundamental analysis. We need to look at the fundamentals of both Canada and Japan for this. Another key factor in CAD’s price action is oil.
Canada’s Side: The pace of purchasing activity in Canada picked up in October to its strongest in 21 months as inventories and prices climbed, according to Ivey Purchasing Managers Index data.
Canada’s central bank is expected to hold rates steady in December after hiking twice this year. But data on Friday showing unexpected strength in the nation’s job market has supported expectations for further increases next year.
On Tuesday we’ve got Bank of Canada’s Stephen Poloz Speech in Montreal at 6 PM, followed by their Press Conference at 7 pm. Poloz is expected to discuss central banks’ ability to understand inflation, which can help guide expectations for further interest rate hikes.
Oil Outlook: Oil jumped to its highest in over two years on Monday as Saudi Arabia’s crown prince cemented his power over the weekend with an anti-corruption crackdown. Prices of oil, one of Canada’s major exports, reached their highest since early July 2015. U.S. crude oil futures settled 3.1 percent higher at $57.35 a barrel. The reason for this jump could be attributed to concerns of Middle Eastern money pulling out of global financial markets.
Japan’s Side: Besides the minor economic figures out of Japan this week, US president’s visit to the Land of the Rising Sun was a key factor in JPY’s weakness on Monday. Trump said Japan could protect itself from a nuclear-armed North Korea by buying billions of dollars of American military equipment. He also wants Japan to build more cars in the US.
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Sentimental Analysis: The third point of the IDDA focuses on market sentiment. Earlier during Tuesday’s Asian session, the CADJPY trading crowd showed slight bearish signs. Meanwhile, the medium-term positioning of the market participants on the Loonie remains mixed.
Trading Strategy: As the 4th point of the IDDA, you must calculate your risk tolerance before deciding on the investment strategy that is suitable for your portfolio. Join us for a free MasterClass to learn more.
Here are Invest Diva’s calculations for important approximate levels for your CADJPY forex analysis
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
|
84.97 |
87.30 |
90 |
|
86.15 |
88.82 |
91.23 |
As an Invest Diva you should be able to put the 3 and 4 together and develop a strategy suitable for your portfolio and risk tolerance at this time. For further help, and if you want to chat with me regarding your trades, join our investing group here. It’s awesome!!
