CAD/JPY Market Watch

9/04/2020 08:16:00 AM (GMT+6)
On the one-hour chart above of CAD/JPY, we can see the bears have taken over to easily break out of the minor consolidation pattern between 81.00 – 81.50. From there, momentum traders seem to be hopping on that break, so the question now is whether or not we’ll see a retest  of the 80.50 handle before the rest of the session?

Well, with an extremely light calendar ahead, the odds are pretty good this theme will run through the rest of the U.S. session, and probably through the upcoming Asia session, barring a surprise news catalyst.

So, the odds are in favor of the bears at the moment, but a rising ‘highs’ pattern and previous support area around 80.50 could be a problem. Also, stochastic is signaling potential short-term oversold conditions, so it may be a good idea to either wait for a bounce up to the 81.00 handle and bearish reversal patterns to form before considering a short.

Or if you think this is just the beginning of a bigger move, watch for a break of the rising ‘lows’ pattern before considering a short swing position as it could draw in higher timeframe traders.

For the bulls, the rising ‘lows’ pattern could draw in short-term traders who may take profit from their shorts, or swing traders who feel today is just a pullback in a longer-term trend. The data was mixed between the leading and lagging economic updates, but arguably more net negative to lower the odds of a risk rebound soon. So if you’re bent on getting in long, wait for bullish reversal patterns at 80.50 before considering a long position.
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