The CAD/JPY pair bounced hard during the session on Wednesday, using the 95 level as work. That being the case, the market looks as if it has respected the previous break out, and that break out has shown that the former resistances now support. With this, I believe that the market should be free to go much higher. Interestingly enough, this market does tend to move based upon oil prices as Canada is a major exporter, and Japan imports 100% of its oil, so the fact that the oil markets look very weak at the moment is a bit counterintuitive.
Nonetheless, the charts don’t like, and price is really the only thing that matters. With that in mind, I am looking to buy this pair on a break above the range for the session on Wednesday, thinking that this market will probably first head to the 96 handle, and then possibly 100 given enough time. We all know that the Bank of Japan certainly once the Yen to fall in value, so certainly the Japanese central bank won’t get involved.
If oil bounces, that could be the catalyst continue buying.
Watch the WTI Crude Oil markets for a possible hand as to whether or not this market is going to go higher. Even though we have been a bit disconnected lately, I feel that ultimately if the oil market goes higher, that will only boost chances of this market gaining. That gain would be enough to only add the pressure going higher, and ultimately I think we could be setting up for that exact move.
Regardless though, I am willing to buy this pair on the simple break higher. Oil isn’t always the only driver, it’s just something that’s going to add to the pressure. I have no interest in selling this market at the moment, as it certainly looks more prone to go higher than lower. In fact, it is not until we break below the 92 handle that I can consider selling this obviously bullish pair at the moment.