CAD/JPY Price Analysis: Bulls seeking a weekly extension for high level R/R
- CAD/JPY is shaping up for a compelling bullish set-up in an extension of Dec correction.
- Bulls can target a weekly continuation level on a retest of 4-hour support structure.
The pair is in the bullish territory on the lower time frames but is due for a correction.
Bulls can apply a swing trading strategy for a discount from the support structure and the following top-down analysis illustrates how to do so as well as the rationale behind the set-up.
Monthly charts
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On the monthly charts, we have a market that is retesting the 61.8% Fibonacci as a support, so the market can now easily head towards the 78.6% Fibo.
In doing so, it will clear the overhead resistance and confirm the upside bias.
Weekly chart
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The recent low is a confluence level of the monthly 38.2% Fibo and the weekly 50% mean reversion, reinforcing the support level.
Similarly, the W-formations have seen a correction to their neckline supports from where the price would be expected to now extend higher in a resumption of the bullish trend.
By measuring the recent correction, a -0.272% Fibo target comes in at 82.70.
Bulls can look for an opportunity on the lower time frames such as the 4-hour chart:
4-hour chart
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With a stop loss below the 78.6% Fibo of the recent bullish impulse and a buy limit at the 38.2% confluence of the market support structure, there are two high levels of risk to reward (R/R) ratios as illustrated on the above chart.
However, with the stop loss below the lows, there is still a 1:3 R/R for a less risky position protected with a deeper stop.
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.
