CAD JPY Added To Watchlist But Needs Patience

CAD JPY Added To Watchlist But Needs Patience

As with practically everything that moves, I’ve been watching  this for a while. My last trade was a swing short back in June of 2011.

It does tend to be slow moving which makes it more cost effective to trade on futures contracts rather than daily contracts where the financing can add up almost as fast as the actual profit on the trade! The thing in particular that attracts me to this pair is MACD. It’s been trending down for considerable time yet no time frame has produced positive MACD divergences. Excluding crash scenarios try and find a chart where a long term low was printed with no positive MACD divergence on any time frame – not an easy feat!

MACD aside, here are a few charts I’m watching that don’t need really need detailed explanations, but do be aware of the 200MA’s on all time frames and consider those as upside risk.

The long term hourly chart shows a clear trend of lower price highs:

Zooming in on the hourly time frame we can quite easily define areas of likely resistance, or better put, areas of ideal low risk short entries:

Finally the daily chart shows price is climbing along a weak trend line. Depending on you’re strategy as a trader you may play safe with a trade like this and wait for a break down through this trend line before entering a position, or even waiting for a possible failed back test of the trend line from below, or, if you are more agressive you may look to enter short on any strength and just hold out for the inevitable….however long that may take to come. Don’t be too reliant on this triangle pattern as a break to the upside is quite possible, particularly with that 200 MA lurking just above.

Because this pair can consolidate for Weeks before making it’s move, it’s one of those where the trade can be completely missed if you take your eyes off it so it could be ideal to set price alerts through you’re chart package at some of the key levels I’ve detailed here and then sit back and wait!

  • RS2OOO
    Posted at 17:28h, 10 January

    Didn’t expect to be in a position so quickly, but shorted CAD:JPY at 75.60 which is defined by the upper resistance line in the hourly chart above.
    Wide stops initially.

  • Roobarbncustard
    Posted at 20:26h, 12 January

    RS, remember the guy on Forex Factory that got wind of the yen intervention, goes by the name of Western? He posted last week that he’s closed his GBP/CAD short from March 2007 for 6900 points! That’s another reason I’ll keep an eye on him.

  • RS2OOO
    Posted at 21:40h, 12 January

    And there’s me feeling proud of myself when I manage to hold a position for a fortnight (and that’s only ‘cos it spent the first 10 days in the red)!

    That is seriously impressive, though a rough calculation suggests 1500+ points would have been technically lost through financing assuming it was a normal leveraged trade.

    Mind you, if my parents had put a £1 short on GBP:CHF when I was born, then another £1 each subsequent birthday, I’d be a multi millionaire now. But no, instead they put it into bonds and I got £2000 on my 21st!

  • Pingback:This Week's Swing Trading Review With Charts
    Posted at 00:48h, 14 January

    […] a brief correction or first signs of a pending trend reversal.CAD JPYOriginal analysis can be found here.There’s not much I can say about this. It was technically a perfect short entry at resistance […]

  • RS2OOO
    Posted at 21:52h, 18 January

    Closed this short a few minutes ago at 75.85 for a 25 point loss.

    If it doesn’t exceed todays high then my system triggers a sell signal on short time frames, however, I’ve started to feel uncomfortable with the trade and as it spiked down 10 points at the moment I was looking at it and doubting it, I just pressed the button.

    I’m pretty sure there is more juice in the short side, but it might take a week or 2 to materialise so I’ll go back to watching it for now.