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CADJPY Channel to Produce 400-Pip Move

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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I don’t discuss CADJPY very often. As yen crosses go, the pair tends to be a bit more volatile and choppy than others which can be problematic.

However, CADJPY has its moments. A look back at the last few months of price action shows a well-structured ascending channel. The lower portion connects with the March 19 and June 25 lows while resistance includes the May 22 and October 1 highs.

For those who have studied the weekly chart, you’ve no doubt seen what appears to be a head and shoulders pattern with the left shoulder starting in December 2017.

Personally, I’m not going to approach this as a head and shoulders simply because it developed at a swing low. That becomes evident when you factor in the downtrend between December 2014 and November 2016.

Still, the ascending channel you see below could present an opportunity for those with a more bearish outlook for CADJPY. The short-term uptrend will remain intact while above channel support, but a close below it would open up downside targets.

The most obvious target for shorts is the multi-year level at 80.50. In fact, that will most likely become my target if sellers force a daily close (using a New York close chart) below ascending channel support.

That said, don’t forget about other horizontal levels such as 83.90 and 82.30. Judging by the price action going back to March of last year, both areas are likely to attract attention.

As I mentioned above, CADJPY is still within a short-term uptrend. It’s important to keep that in mind as we could continue to see bouts of strength while above channel support. But with 400 pips to work with below support, this is one to keep an eye on moving forward.

Lastly, if you share my relatively bearish view of crude oil, then a CADJPY bearish bias starts to make a lot of sense. Of course, oil bears need to clear a channel of their own, but they’re well on their way. See this post for more.

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CADJPY ascending channel on the daily chart

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14 comments
Mimi says

Much appreciated!

Reply
    Justin Bennett says

    Cheers Mimi. 🙂

    Reply
Gideon says

Sir what happened to UJ after closing below trend line on Friday and retesting the same trend line today hoping to sell but surprisingly the pair went back inside the channel with a spid after the Sell and SL hited

Reply
    Justin Bennett says

    The daily close at 5 pm EST is what matters.

    Reply
Sera says

Thanx Mr. Spot on

Reply
Joseph says

Thank you Justin for the analysis. I will keep an eye on this one. Have you got other analysis on EUR pairs? I saw EURCHF carved a bearish engulfing last week and then a bullish pinbar on EURSGB? Do you think they are a good set up to buy? Thanks

Reply
    Justin Bennett says

    Not at the moment, but we’re always discussing ideas in the member’s area.

    Reply
Pierre Mifsud says

I agree with you that this is not a head and shoulder patterns…it would look more to me as a potential bearish flag….however I do not think that CADJPY has a bearish outlook overall ….it reminds me of USDCAD of a month ago….Besides crude oil is not bearish it is in the direction to move above the 71 handle at least for now….with wave harmonics this is easily predictable…worst of all it would reach the support of 65.69 and then move towards the 71 handle

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    Justin Bennett says

    I agree on the bearish flag if you’re referring to the ascending channel that began with the 2016 low. If that breaks down, I also agree that we could see CADJPY trading much, much lower.

    Reply
Kathleen Carmen says

Hi Justin,

I also see the potential bearish flag, will keep an eye on this one.

Regards, Kate

Reply
    Justin Bennett says

    Hi Kathleen, yes, as long as it’s the one from 2014 and not the one from earlier this year. I’ll likely provide an update to CADJPY later this week.

    Reply
Kathleen Carmen says

Hi Justin,

Can I subscribe to New York close chart I do not wish to change my trading platform or broker.

Regards,

Kate

Reply
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