Since breaking above the 92.23 pivot zone and the 200 Simple Moving Average on the 4H timeframe, CAD/JPY bullish momentum has accelerated. The pair has posted nine consecutive daily gains and it remains to be seen if today will continue the trend.
After clearing above 94.10, March highest point and the 38.2% Fibonacci retracement level from 99.14 down to 90.77, CAD/JPY bulls eased off once hitting 94.47 and the 100-Day Moving Average. The daily Pin bar formed on April 3rd lacked the necessary continuation so far, leaving the window open for another rally toward the 95.00 area if the Canadian Employment Change release is well above 21.5K.
Since there were no corrections in the last two weeks and the pair is near the 200-Day Moving Average, priced at 94.65, the pair is likely to have already priced in the forecasted numbers. Above 94.65 the pair faces the 50% Fibonacci retracement at 94.96 and lastly an old pivot zone at 95.15. Consequently, this area can provide a temporary high, so traders should be wary if bullish spikes hit the resistance levels and return quickly towards 94.00.
Below 93.90-94.00 area, CAD/JPY can correct towards 93.10, even 92.10/20 – where a confluence of 4H SMA and 61.8% Fibonacci Retracement would provide a perfect technical higher lower – and the pair would still remain bullish in the large picture.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
