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CADJPY Tests Strong Support – BoJ Coming Up


Sep.19.2016

CADJPY Tests Strong Support

For the fourth time since June 2016, CADJPY tests strong support below Ichimoku on Monday. Could the pair break out this time? And what to do if it doesn't? Read on for an Invest Diva style technical and fundamental analysis. Don't forget to read my book if you are new to these kinda stuff.

 

CADJPY Tests Strong Support - Kiana Danial with Orbex CADJPY Tests Strong Support - Kiana Danial with Orbex

 

CADJPY Tests Strong Support - Technical Analysis

Long time frame

The CAD/JPY pair tested the all important support and pivot level of 77 on Monday ahead of the BoJ policy decision. 

 

 

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Having broken below the Ichimoku cloud, the pair could be on its way to completing a Saucer Top Cycle. As CADJPY tests strong support, a break below 77 could open door for further drops towards 75 and 73 in extension. A failure to break will make 77 that much stronger.

 

CADJPY Tests Strong Support - Technical Analysis CADJPY Tests Strong Support - Technical Analysis

However only a break above the Ichimoku cloud would signal a reversal and that the strong support has held the pair's down-fall. Resisting pivot is set at 23% Fibonacci level at 79.70 and extended resistance is set at 81.50.

 

CADJPY Tests Strong Support - Fundamental Analysis

Coming up on the economic calendar on Tuesday  Bank of Canada's Poloz will speak in Quebec City at 4:30 PM GMT, and Japan will release their Trade Balance  during the next day’s Asian session at 11:50 PM GMT. Continued on Wednesday BOJ Monetary Policy Statement will be out tentatively to further shake the JPY crosses. 

More on the Economic Calendar...

Tuesday: America’s Building Permits  will be released at 12:30 PM GMT during the New York session.

 

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Wednesday:

Asian Session: On Wednesday's Asian session, all eyes will turn to the Land of  the Rising Sun.

Bank of Japan (BoJ) is currently deep in an aggressive easing campaign and is quickly losing its credibility. There is seemingly no scenario where the policy authority can rescue the strengthening Japanese Yen. This could position the market for a critical evaluation. In which case it can return Mr. Yen crosses to yet another uptrend. That means further down-moves for the CAD/JPY pair.

 

New York Session: All eyes will be on the US as the FOMC Rate Decision  and Fed Summary of Economic Projections is out at 6 PM GMT. Based on some of their recent testimonies, majority of the FOMC voting members are starting to lean towards a hawkish stance, which suggests that a rate hike could be on the table. Should the Fed decide to stay put for now, their revised economic projections might provide clues on whether a rate hike is still possible in December or not.

Next Day's Sydney Session: The volatility will continue as we move to the next day’s Sydney session with Reserve Bank of New Zealand Rate Decision  at 9 PM GMT.

Don’t forget to join me for a free webinar on Thursday as I cover Kiwi Trading Strategies, LIVE.

 

CADJPY Tests Strong Support - Trading Strategy

Step one: Calculate your  risk tolerance.

Step two: Pick a scenario that best matches your risk tolerance.

Bearish Scenario

 

Wait for a confirmation below 77 before taking action.

Bullish Scenario

Wait for a confirmation above the Ichimoku cloud before taking action.

You can target either levels of support or resistance stated below based on your RISK TOLERANCE.

Here are Invest Diva's calculations for important CAD/JPY approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
73 77 81.50
75 79.70 84

 

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Kiana 喜愛成
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