The CAD/JPY pair initially fell during the course of the session on Thursday, but found the 95 level to be supportive enough to turn things back around and form a massive hammer. This hammer suggests of course that the market is going to go higher and that we are fighting plenty of support below. With that, I would be a buyer on a break above the top of the candle, which is roughly the 95.50 handle. If we do that, I believe that the market will then go to the 96 level, and initially going to the 100 level which is my longer-term target anyway.
The market has been in an uptrend for some time now, and as a result I feel it’s only a matter of time before we continue going higher, and as a result I am buying dips as they appear on short-term charts. This pair is one of my favorites though, because it is normally a nice, simple, correlation play between the oil market and Forex. What I mean by that is that the Canadians export oil, and then the Japanese import 100% of their oil.
No need to fight the trend, plenty of support below.
I think there is a massive amount of support and the 94 level. However, I don’t even think it will get down to that area. If we broke below that area, obviously it would change the outlook of this market in general but I think that the move above the 95 handle was significant enough that it needed to be retested, which is exactly what we did during the session on Thursday. With that, the next day or two should be important enough to dictate where we go next, and then eventually show its true colors.
The market now looks as if it’s going to make the decision, and once the decision is made I think that a lot of traders out there will step from the sidelines in get involved. At this moment time though, I thoroughly believe that we will eventually go higher and head to the 100 handle. At that point time, I would expect quite a bit of resistance.