The Loonie is having trouble extending its downswings near a key support zone!
Think it means CAD/JPY is ready to extend a longer-term uptrend?
Let’s take a closer look at the 4-hour time frame!
CAD/JPY 4-hour Forex Chart by TradingView
Japanese yen traders found some support from slightly better-than-expected manufacturing surveys and comments from BOJ Governor Ueda at the ECB Forum, where he noted that underlying inflation remains below the central bank’s 2% target. Still, the yen gave back some of its weekly gains on Tuesday as geopolitical tensions and trade war concerns began to ease.
Over in Canada, a modest rebound in crude oil prices and signs of progress on a potential U.S.-Canada trade deal helped limit the Loonie’s losses, even though it remains one of the less favored major currencies when risk appetite returns.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the Canadian dollar and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
CAD/JPY has been slipping since hitting resistance at 107.00 last week, and is now trading near the 105.00 psychological level.
As you can see, this area lines up with the 100 SMA on the 4-hour chart, the S1(104.67) Pivot Point, and the ascending channel support that has held since May.
If the pair holds above 105.00 and prints bullish candlesticks, it could resume its longer-term uptrend. A move toward the 106.00 Pivot Point or even a retest of the 107.00 highs would be on the table.
But if downside momentum picks up and CAD/JPY breaks below the channel support, the uptrend could be in trouble. In that case, watch for a possible drop toward the 104.00 handle or the S2 Pivot Point near 103.69.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
Feed from Babypips.com