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Can the CADJPY reach the top of a channel that has been in place for two years?
Or will the pair reverse before ever reaching that channel top?
Watch the video below to get my thoughts.
Be sure to also scroll down for more commentary and an annotated chart.
CADJPY buyers are closing in on a significant resistance level.
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The descending channel that extends from the 2018 high will undoubtedly attract sellers if tested.
Here is a view from the weekly time frame:
That channel resistance is now less than 100 pips from today’s price.
So, will CADJPY reach that area and possibly reverse from it?
The truth is, nobody knows what will happen.
But luckily, there will be more than one way to play the CADJPY over the coming days and weeks.
Notice the smaller ascending channel below.
I discussed a similar pattern on AUDJPY in Tuesday’s post.
The combination of the larger multi-year descending channel above and the smaller ascending one below gives us options.
If CADJPY buyers somehow manage to retest the descending channel top near the 85.00 handle, it could present a short opportunity.
Of course, it will depend on how the pair behaves in that 85.00 region.
Alternatively, if CADJPY fails to reach 85.00, a daily close below ascending channel support near 83.20 would confirm the breakdown.
That too, could offer a short opportunity.
Remember that I use New York close Forex charts, so the “daily close” refers to the 5 pm EST closing price.
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The first key support below that 83.20 area comes in at 81.60 with a close below that exposing 80.20.
So regardless of what happens, we could have a short opportunity in the works.
What about buying CADJPY?
Only a daily close above the 85.00 area would suggest continued strength.
But even if that occurs, the longer-term trend is still pointed lower, so I wouldn’t want to be a buyer here.