Earlier, we reported that the EUR/JPY could make a comeback thanks to the ongoing rally in stock markets, boosting the appeal of XXX/JPY pairs. Another potential reversal may already have taken place in the CAD/JPY, ahead of Canadian CPI data tomorrow.
The CAD/JPY has been printing bullish price action ever since the head and shoulders reversal pattern failed towards the end of March and the bears were trapped.
Today it bounced off its bullish trend line and support around 83.50 after initially extending its losses for two consecutive days earlier. Once again, the bears may have been trapped after it had formed a bearish-looking daily candle yesterday when the rally came to a halt near the 200-day moving average (84.33).
If I am reading this correctly, a rally above the 200-day SMA and previous high at 85.23 could be on the cards soon, with the next potential resistance seen around 85.60ish. However if the short-term bullish trend around 83.50 breaks first then all bets may be off.
Risk Warning Notice Foreign Exchange and CFD trading are high risk and not suitable for everyone. You should carefully consider your investment objectives, level of experience and risk appetite before making a decision to trade with us. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of the markets that you are trading. Margin and leverage To open a leveraged CFD or forex trade you will need to deposit money with us as margin. Margin is typically a relatively small proportion of the overall contract value. For example a contract trading on leverage of 100:1 will require margin of just 1% of the contract value. This means that a small price movement in the underlying will result in large movement in the value of your trade – this can work in your favour, or result in substantial losses. Your may lose your initial deposit and be required to deposit additional margin in order to maintain your position. If you fail to meet any margin requirement your position will be liquidated and you will be responsible for any resulting losses.