CAD/JPY Price Analysis: Bears setting up to target the 79 area
|- CAD/JPY is showing signs of a downside extension giving rise to a shorting opportunity from resistance.
- The price is currently correcting which offers the opportunity of placing a sell limit and fade market.
Developing story
CAD/JPY is technically bearish from both a daily and 4-hour perspective which gives rise to a bearish analysis and trade setup in the following charts.
From the daily chart, a classic 1,2,3 impulse, correction and impulse is being displayed with the price in the throes of wave 3 to the downside.
This gives rise to a trade entry setup on the lower time frames as illustrated below.
Daily chart
4HR chart
On the four-hour time frame, the sell limit can be placed at the structure that has a confluence with a 38.2% Fibonacci retracement of the latest bearish impulse which has started to correct.
In doing so, with a conservative stop loss placed above structure/resistance, there is a 1:3 risk to reward if seeking the point of control since late May's rally.
This is a level that coincides with the early August support structure.
An alternative way to approach the market would be for an equal risk to reward ratio with a stop loss brought in to 80.58 and to target to only 79.50.
The price action will be monitored from a 4-hour analysis and updates will follow if the sell stop level is achieved with a view to breakeven at the first structural opportunity.
Update: Sell limit filled
Update: Breakeven achieved
The price moved to create a lower low following entry which has enabled the stop loss to be moved to breakeven.
The story will continue in a new article as the price action and trade develops, updated on 4-hour time frames.
A link to the news flow will be posted here shortly.
Target achieved for 3R profit
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