CADJPY buyers have weathered the storm, at least so far.
On October 21, I wrote about how Canada’s elections could trigger an increase in volatility for the pair.
I mentioned in Monday’s members-only video that the event would either produce a 100+ pip move or be a non-event.
It turned out to be the latter.
That isn’t a bad thing if you’re long CADJPY like I am, though.
I’d rather see a market grind higher like this in an orderly fashion than be influenced by surges in volatility.
As of this writing, the CADJPY is up 120 pips since it retested the 81.80 support area I discussed in my October 14 post.
Notice too that today’s session is testing the 83.20 resistance level I pointed out on the 14th and again on the 21st.
In fact, the pair is off its session high by 30 pips after carving a Thursday high of 83.21.
That 83.20 area is going to be a significant hurdle for buyers.
The 83.20 area also holds the key to a move higher, perhaps up to the next critical resistance area at 84.20.
As always, it’s going to take a daily close above 83.20 to expose 84.20.
Support remains the 82.50 region with a close below that opening the door to the 81.80 area.
I’ll continue to favor buying CADJPY dips as long as the pair is carving higher highs and higher lows since the year-to-date low in August.
I also still have the measured objective for this potential inverse head and shoulders up around 85.20/50.
That will continue to be my longer-term target as long as these higher lows and higher highs persist.
Don’t discount the potential for a pullback, though, especially given how the CADJPY has rallied for 340 pips so far without a meaningful retracement.
On the other hand, a close below 82.50 would indicate weakness.
It would also expose 81.80.
However, only a daily close back inside the descending channel below would negate my bullish outlook.
But I do want to see this constructive price action continue in order to stay long the CADJPY, as I mentioned in the member’s area last week.