The CAD/JPY pair went back and forth during the session on Monday, essentially settling nothing by the time the market closed. That being the case, the 93 handle still looks like it is going to be supportive, and with the Friday candle being somewhat of a hammer, we believe that this market could very easily go higher, especially considering that oil markets are at a major support level. Oil markets rising normally push his pair higher, simply because Canada exports oil, while Japan imports it. In fact, the Japanese are one of the few major economies it imports 100% of its energy as far as petroleum is concerned.
The pair should continue to follow the oil markets in general, but you should also keep in mind that while the Canadian economy isn't exactly screaming at a white-hot pace, it is deftly doing better than the Japanese economy. The Bank of Japan will continue to work against the value of the Japanese yen, and as a result there's no reason to think that it should appreciate demonstrably against the Canadian dollar.
Major support below
I believe that there is a significant amount of support below, and as a result we should see buyers step into this market sometime soon. That being the case, a break above the highs from the session on Monday is reason enough to start going long. I think that we could easily go to the 95.50 level without too many issues as the recent fall has been a bit strong, and probably overdone. Above 95.50 is a completely different story though, and as a result this market should stay in a relatively small range, basically 200 pips over the course of time.
The shooting star that formed before the significant fall a few sessions ago should continue to be resistance, but if we break above the 96 handle, that shooting star would not only be broken, but I believe that that point in time this market should continue to go much higher as 97 will be targeted first, and then very possibly the 100 level.