Considering that analyses are done on the 1h timeframe and that the resistance is only 30 pips away, there could be a very short and fast wave to the upside.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
CAD/JPY symbol on the MT4 platform
Type: Bullish
Key support levels: 79.00, 78.90
Key resistance levels:79.18, 79.36
Price Action:
It is pretty obvious that price is attempting to initiate a consolidation phase after CAD/JPY has produced a double bottom near 78.95. But at the same time, the pair is producing lower highs, which might suggest the beginning of the downtrend.
However, the previous support has been rejected along with the 200 Exponential Moving Average and RSI formed a bullish divergence. These facts are suggesting at least a correctional wave to the upside, where the resistance could be reached in a very short period of time.
The key resistance is seen at 79.36 and it is confirmed by two Fibonacci retracement levels. Both Fibs were applied to last waves, one to the last wave up and another to the last wave down. 88.6% Fibs and 61.8% Fibs meet at the same price, which is 79.36 – a potential upside target.
Potential Trade Idea:
The good entry point would be near the 200 EMA, preferably at 79.00 psychological level, The stop loss could be placed just below the spike produced today at 78.94. The take profit, based on two Fibs, could be near the 79.36 level.
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