CADJPY has massive upside potential as we move into the final months of 2019.
I included this one in Saturday’s forecast video.
However, I wanted to highlight the pair again, as I do think CADJPY has a lot of potential following Friday’s rally.
That late-week move put the pair above a key area between 81.50 and 81.80.
As I mentioned in Saturday’s video, that region could be as low as 81.20 depending on if and when the pair retests former channel resistance as new support.
There are actually two things occurring here.
The first is the close above the descending channel that extends from the July high.
Friday’s close above the 81.50 area hints at a break from this multi-month consolidation.
It also means any retest of the 81.50 region is likely to attract buyers.
But as I explained on Saturday, there may be another pattern at work.
Although the neckline is a little steep for my liking, the price action since late May and early June appears to have carved a reversal pattern.
More specifically, an inverse head and shoulders.
That wouldn’t be too surprising considering we’ve seen the same thing happen on USDJPY, and the yen pairs do tend to mimic one another.
If you watched Saturday’s Forex forecast video, you know the height of this potential bullish reversal pattern is about 400 pips.
That means Friday’s breakout from the 81.50/60 area has an objective that’s 400 pips higher, or around 85.50.
Interestingly enough, the descending channel top that extends from the 2018 high comes in around 85.20/50.
It’s all detailed in my weekend video, so be sure to watch it if you haven’t already.
Now, keep in mind that all of the above is contingent on CADJPY buyers keeping prices above the channel top/neckline near 81.50.
The 81.80 horizontal level has also been a factor so far today and may continue to attract buyers this week.
Keep in mind too that the pair is about 80 pips above the 10 and 20 daily EMAs.
I use those moving averages to illustrate the mean or average price.
The distance between those averages and today’s price hint at the likelihood of consolidation early this week.
If bulls can get behind last week’s breakout, we could see CADJPY move higher toward the next key resistance at 83.20.
A daily close above that would expose 84.20 and perhaps even the measured objective between 85.20 and 85.50.
Alternatively, a close back inside this descending channel would negate the bullish outlook and re-expose the 80.00 handle.
That said, as long as CADJPY is above 81.50 on a daily closing basis, I have to stay bullish with an initial target of 83.20.