I have been eyeing this pair for a while now. Top down analysis indicates we have a bearish imprint in the horizon. On the 6-month time frame, CADJPY is in consolidation.
Dropping down to the 3-month timeframe, we are witnessing the completion of a bullish correction. Moving down to the monthly and daily time frames, we have a change of character on the daily that has created unmitigated supply sitting at 108 price handle. While we have a bearish imprint, I recommend we exercise caution considering there are three possibilities.
- On the daily timeframe, the price could retrace back to the unmitigated supply targeting the fresh order block and liquidity sitting at 107.9 and 108.66 price handles respectively.
- Price could rally and clear the fair value gap sitting at 112.25 then drop down.
- A further rally could be in the works, though unlikely targeting the unmitigated supply on the monthly timeframe at 120 price handle.
In my opinion, scenario (1) and (2) have a higher probability of occurrence. We intend to place our sell limit orders at the liquidity sitting at 108.66 price handle and take profit at 92 for the short term and 76 for the long run.
NB: Our analysis is strictly based on supply and demand, suitable for swing traders.
Risk Warning: CFDs carry a high level of risk to your capital, and you should only trade with money you can afford to lose. Trading may not be suitable for all investors, so please ensure that you fully understand the risks involved and seek independent advice if necessary.
Disclaimer: I am not a financial advisor, and I am not telling you where or when to take a trade. I express my personal opinion only. Trading in financial markets involves risk. I am not responsible for any losses incurred due to your trading. I do not recommend any specific trade or action, and any trades you decide to take are your own.