Trading the Forex markets on behalf of Samuel and Co Trading in Watford. I am a Technical Trader, here to take on the game and turn the sceptics into believers. Join my journey as I release weekly technical analysis and trade breakdowns – opening the floor to feedback and conversation. I look forward to engaging with you all.
In this week’s Technical Analysis Article, CADJPY. Let’s get into it.
On the weekly chart, we can see that from the last quarter of 2014 to November 2016 we were in a bear market; with price finding a floor around the 75.5 area – which is the lowest price had been since 2012. From here the market made a recovery moving up to the 89.0 level and has been ranging within the 80.5 – 89.0 support/resistance zone since. Around Sept ‘17 & Jan ‘18 we saw price try to break above this level twice but was unable to hold and continued fluctuating back down to the 80.5 support zone.
From the Daily chart we can see around Oct 2018 the market once again couldn’t break the 89.0 resistance level, instead, it reversed down to the 77.5 low but was unable to hold and close below the 80.5 support zone. The bulls then came back into action and pushed price back up until resistance was found at the 0.618 Fib, along with dynamic resistance of the 200EMA. This brought the price back down towards the 80.5- where once again the market reacted to this level and the bulls came back to take over control from the bears. We know the market has reacted off this level multiple times on the higher time frames, giving us confirmation that this is a solid support level – meaning that the market could possibly do this again (reverse), rather than breakthrough and continue to the downside.
As we get closer to the action, for anyone who likes to trade advanced patterns – we also have a Gartley D leg completion that has just occurred. We already had our eyes set on trading this pair to the buy side with price being at a key weekly support level, so the Gartley D leg completion is just that extra bit of confirmation that helps us to find a good entry point, as well as where we may look to take profits.
I have drawn in traditional profit targets on this trade for those who may have entered –
Using a Fib retracement drawn from A to D, our conventional profit targets would be as follows –
- Profit Target 1: 0.382 Fib (82.55) – giving us around 1:1 risk/reward ratio.
- Profit Target 2: 0.618 Fib (83.55) – giving us around 1.5:1 risk/reward ratio.
With a stop loss placement 20pips below X, I’d be looking to go risk-free on this trade upon profit target 1 being hit. The market is currently on its way to profit target 1 and hopefully, this will continue without any further movement to the downside. However, we know price action never moves in straight lines, so let’s see if the bulls can continue to control the market over the coming days and weeks.
Thanks for your time today, I look forward to your thoughts.
Disclaimer: Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in this article is not a specific buy or sell recommendation and is presented solely for informational purposes only. Not to be taken as financial advice.