Chart of The Day CADJPY
CADJPY Probable Price Path & Potential Reversal Zone
CAD: Market worries about the progress of negotiations on the US economic stimulus plan. New York oil futures fell by nearly 0.5% from a nine-month high last Friday to US$46.6 a barrel. Last week, it still rose by nearly 0.7%, which is the sixth consecutive week of growth. Canada's capacity utilization rate in the third quarter rose from 70.7% in the second quarter to 76.5%, which was lower than market expectations of 78%. The consumer price index for November will be announced on Wednesday and is expected to rise 0.8% year-on-year
Factors supporting: Fundamentals improve from current levels. Factors against: Risk aversion, BoC policy
JPY: Japan Tankan Survey reported improved conditions and outlook: − The Bank of Japan’s Tankan Survey reported the Large Manufacturing Index improved to -10 in 4Q (3Q: -27) while the gauge for outlook also rose to -8 (3Q: -17); both readings were better than expected, pointing to improvement in current conditions and expectations for the industry. − The Large Non-manufacturing Index also picked up to -5 in 4Q (3Q: -12) and the Outlook index went up to -6 (3Q: -11), offering similar assessment for the services sector. − The Large All-Industry Capex Index however fell 1.2% YOY in 4Q (3Q: +1.4%), its first decline since 1Q16, as firms are expecting to cut investments after having raising them for years, suggesting that firms are also wary about next year’s outlook.
Factors supporting: BOJ policy, risk aversion. Factors against: Weak fundamentals
From a technical and trading perspective, CADJPY is testing pivot resistance towards 83.00, the test of this potential interim double top is accompanied by momentum divergence, this combination of technical factors could prompt a pull back to test trend support at 80.40 before bulls reload for the next assault on the 83.00 area. On the intraday H1 timeframe there is a potential head and shoulders pattern developing which would warrant bearish exposure on a breach of the neckline at 81.15 exposing a downside equality objective to the daily trendline at 80.30/40
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!