By: DailyForex.com

The CAD/JPY pair initially fell during the course of the day on Wednesday, but as you can tell the 93.20 level offered enough support to turn things back around and form a nice-looking hammer. This hammer of course suggests that the market is going to go higher from here, perhaps bouncing as we need to see some type of correction from the larger correction in order to continue the uptrend.

Ultimately, break above the top of the hammer should send this market looking to the 94 level for resistance, and if we can get above there 94.50 should be targeted right away. Ultimately, we could go as high as 96, but this of course will have major influence coming from the oil markets, which don’t necessarily look that strong at the moment.

I believe that the Canadian dollar continues to show weakness overall, but the Japanese yen is more or less a safety currency, so this probably will be more influenced by oil than the actual value of the Canadian dollar against most currencies. Also, keep in mind that the US dollar will influence the oil markets themselves, so you kind of have to pay attention all three markets.

Quite frankly, there’s a simpler way to play this.

I do know that there’s a simpler way to play this, and this is exactly why I used technical analysis. Instead of overthinking the three markets and trying to triangulate which should happen, I simply pay attention to what’s going on in the chart on my desktop. A move above 94 certainly bullish in this market, and I think could have is going much higher. I do recognize of this probably choppiness above, so really I believe that the buyers will step back into the marketplace every time this market dips, as it certainly is still bullish, even with the massive selloff over the last couple of months.

On the other hand, if we break below the 92.50 level, I think we go immediately down to the 91 handle, as that would be a significant break of support.

CADJPY 8714

Related Articles
  1. Investing Basics

    What is Convertible Preferred Stock?

    Convertible preferred stock is preferred stock that can be converted into common stock as of a predetermined date at a specified ratio.
  2. Economics

    Calculating the Consumption Function

    The consumption function shows the level of consumer spending as it relates to disposable income.
  3. Insurance

    Which Kind of Life Insurance Is Best for You?

    Parse the pros and cons of different policy types to ensure the best coverage for your needs.
  4. Insurance

    Explaining Co-Pays

    A co-pay is a set dollar amount an insured patient pays when visiting a doctor, filling a prescription, having tests performed or receiving other medical treatment.
  5. Investing Basics

    What Does Clawback Mean?

    A clawback occurs when money or benefits that have been distributed are taken back because of unforeseen or unusual circumstances.
  6. Economics

    Explaining the CAMELS Rating System

    Regulators use the CAMELS rating system to evaluate a bank’s level of risk and overall condition.
  7. Investing Basics

    Understanding Brokerage Fees

    Agents charge brokerage fees for facilitating transactions between buyers and sellers.
  8. Investing Basics

    What is the Theory of Backwardation?

    Backwardation occurs when the futures price of a commodity is lower than its market price today.
  9. Home & Auto

    Millennials Guide: How To Read a Lease

    Everything you need to know before you rent a home.
  10. Forex Strategies

    Two Great Currencies To Profit From Oil Volatility

    U.S. dollar crosses with Canadian and Australian dollars offer easy access to crude oil trends due to their tight correlation with energy futures.
RELATED TERMS
  1. Sticky Wage Theory

    An economic hypothesis theorizing that pay of employees tends ...
  2. Cost Of Funds

    The interest rate paid by financial institutions for the funds ...
  3. Earnings Before Interest & Tax ...

    An indicator of a company's profitability, calculated as revenue ...
  4. Implied Volatility - IV

    The estimated volatility of a security's price.
  5. Plain Vanilla

    The most basic or standard version of a financial instrument, ...
  6. Operating Cost

    Expenses associated with the maintenance and administration of ...
RELATED FAQS
  1. Can mutual funds outperform savings accounts?

    A mutual fund can – and should – outperform a savings account. In most cases, it should not even be a close race. Savings ... Read Full Answer >>
  2. Can mutual funds invest in private companies?

    Mutual funds can invest in private companies, which may come as a surprise to many investors. It is rare for a fund to have ... Read Full Answer >>
  3. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  4. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>
  5. Why is my 401(k) not FDIC-Insured?

    401(k) plans are not FDIC-insured because they are typically composed of investments rather than deposits. The Federal Deposit ... Read Full Answer >>
  6. Can I use my IRA savings to start my own savings?

    While there is no legal reason why you cannot withdraw funds from your IRA to start a traditional savings account, it is ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!