I’m revisiting this swing trade idea I had in December last year, and it looks like there’s confirmation that a reversal is about to happen. I hope I’m not too late!
Long CAD/JPY Trade
I had my eye on this inverted head and shoulders pattern on the daily time frame of CAD/JPY late last year, but I was hesitant to open positions right before 2019 came to a close.
When I checked back in on the pair, I noticed that price already broke through the neckline to confirm that an uptrend of roughly the same height as the pattern (400 pips) might follow.
Fundamentals support gains for the Loonie as Canada’s latest jobs release turned out much better than expected. The economy added 35.2K jobs in December versus the projected 24.9K gain and the earlier 71.2K drop.
At the same time, improving risk appetite is favoring the commodity currency these days while the lower-yielding yen is giving up ground. This mostly stems from easing tensions in the Middle East, as neither Iran nor the U.S. appear to be making matters worse.
There are no major reports from both Canada and Japan this week, but the action could pick up next week as the BOC and BOJ are due to make their policy decisions. No actual changes are expected, but the Japanese central bank is widely seen to be more dovish.
I was initially eyeing entry around 83.75, but I’m gonna have to adjust that higher to current levels (84.30) while maintaining a 200-pip stop and a 400-pip target.
What do you guys think?
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