CAD/JPY Price Analysis: Bears can target 61.8%, bulls look to prior trendline support
- CAD/JPY is lower on a collapse in oil prices and on risk-off flows.
- CAD/JPY has reached a key support structure where a pullback/upside correction could be expected.
- A continuation of the upside will likely require a period of consolidation.
- Bears can look for a continuation to 61.8% fino target and weekly support structure in next downside impulse.
CAD/JPY Weekly Chart
CAD/JPY Daily Chart: Expecting pull back
4-Hour Char: Bearish and a long entry signal is still required
Daily Chart: Potential for bullish H&S continuation
Bears can target 61.8% Fibonacci retracement below 82 the figure
CAD/JPY has seen some large paring back of longs which have subsequently sent the pair into an oversold condition at structural support in a fast downside move. A pullback might be expected to test the trendline support. However, the 4-hour outlook is not validating an upside bias at this stage, although the price is static at a compelling zone for a period of consolidation and choppiness which could equate into an H&S pattern, potentially before the next leg higher.
On the other hand, should the risk-off themes continue, oil will continue to suffer, central banks will switch dovish and the yen will catch a prolonged bid as a safe haven? In such a scenario, the downside targets are made on the weekly outlook to the 61.8% Fibonacci retracement target.
Key notes about the coronavirus
- Officials say they have limited knowledge about the virus and the risks posed by its mutations.
- At least 81 are dead in China, and more than 2,700 are confirmed to be infected.
- Some health experts estimate up to 100,000 people could be infected.
In a report written in The Hill, Joseph Guzman explains that Chinese officials warn infected patients can spread the virus before showing symptoms:
A longtime adviser to the U.S. Centers for Disease Control and Prevention, Dr. William Schaffner, told CNN the new development means “the infection is much more contagious than we originally thought.”
Schaffner called it a game changer and warned current preventative methods won’t be enough to fight off the outbreak since tracking down the contacts a patient had before experience symptoms complicates the situation.
Market implications
The fear of contagion and the concerns that the virus is unlike nothing seen before is keeping markets on edge.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
