CAD-JPY – There are More Interesting Instruments Than EURUSD and GBPUSD

CAD/JPY being an exotic instrument is not very popular among FX traders but investors should appreciate every good technical pattern on any chart, not limiting themselves to only one asset like for example EURUSD. On CADJPY we can see a very promising technical situation which is promoting the long side of the market.

Since the last November, the price was advancing higher and made over 1400 pips. In December, the appreciation stopped on a very important resistance created by the lows from August and September 2015. After the breakout, this level was tested as a resistance in April 2016 and as we can see, plays an important role again now (orange area).

After touching 88.8, the upswing was paused by the local correction, which is still shaped like a wedge (black lines). Wedge is a trend continuation pattern so this is our base scenario here. In addition to that, buyers managed to defend the local long-term support on 84.8 (green) and deter the price from the test of the lower line of the wedge. This shows that the buying pressure here is high. On the lower time frames you would also see that the bounce from the support was done with a help from the triple bottom formation. I am not a fan of this formation but the divergence here was clear and the reversal was sharp.

After bouncing from the 84,8 the price created three long bullish candles. This alone is enogh to create a buy signal, but as you can see, we have more additional factors here. The closest resistance is the upper line of the flag and the chances that the price will get there are very high.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis