Technical Sentiment: Bullish
Key Takeaways
Price action indicates more gains are in store for CAD/JPY early next week, despite mixed signals earlier today.
Technical Analysis
On Thursday Yen continued to underperform while the Canadian dollar maintained a bullish bias ahead of CPI and Retail Sales reports, making it easy for traders to lift CAD/JPY and close just above a very strong price pivot zone at 94.86/89. Friday saw a bit of a shake-out as price dipped back to the 50-Day Simple Moving Average at 94.46, only to rally back into bullish territory towards the end of the day.
Stochastic remains in overbought territory on both 4H and Daily time frames, however this bullish swing can easily continue while price keeps making quick intra-day corrections. Daily price action shows a bullish engulfing pattern, indicating more upside rather than topping conditions. Buyers will be looking for one final confirmation on Monday: a break above Friday’s High (currently priced at 94.94) will pave the way up to 95.79 – 96.22. Short term bullish potential exhausts in this location, so trade accordingly.
Free Reports:
Failure to remain above 94.89 followed by dips below the 50-Day Simple Moving Average will not constitute valid sell signals. Main trend remains bullish, so the 200-Day or 100-Day SMAs can still catch the pair from falling too much. The preferred strategy at this time should be limited to buying dips and bullish price action signals.
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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets
