The economic recovery of 108 trillion yen or 20% of Japan’s GDP in response to the global pandemic of Covid-19 is the most massive announced worldwide. While it should provide a safety net for the already struggling economy, differences over its distribution have emerged. A lack of equity and timeliness has been noted, which could reduce the short-term positive impact of the debt frenzy. The Government of Canada, probably in worse shape than Japan, has adopted a stimulus plan of 107 billion Canadian dollars. The CAD / JPY advanced in its short-term resistance zone, from where a profit sale is expected.
The yen is a popular asset during turbulent times.
The force index, a new generation technical indicator, shows the collapse of the upward momentum after retreating from a new peak in 2020. A shallow descending level of resistance has emerged and the level of support horizontal has been converted to resistance, as indicated by the green rectangle. This technical indicator is now expected to contract below its rising support level and in negative territory. He will cede control of the CAD / JPY to the bears. You can read more about the strength index here.
The price action was rejected five times by its short-term resistance zone, making the current one the sixth. This area is located between 77,783 and 78,408, as indicated by the red rectangle, which includes a downward price differential. Today’s Canadian jobs report is expected to show up to 500,000 job losses for March, anything above the upper range should provide a bearish catalyst for faster sales in CAD / JPY.
Forex traders are advised to watch the intraday high of 76.948, the peak of a previous downward price spread. A breakdown below this level is favored to result in the addition of clear short commands, providing the volume required to put pressure on the CAD / JPY in its lower Fibonacci 61.8 retracement fan support level. He entered the support zone located between 73.807 and 74.647, identified by the gray rectangle. Other disadvantages cannot be excluded. You can find out more about a failure here.
CAD / JPY Technical Trading Configuration – Profit Taking Scenario
- Short entry @ 77,600
- Take Profit @ 73.800
- Stop Loss at 78,700
- Drop potential: 380 pips
- Upside risk: 110 pips
- Risk / reward ratio: 3.46
A break in the strength index above its decreasing resistance level will put the CAD / JPY up. The long-term resistance zone is between 80,920 and 81,455. The underlying fundamentals suggest further declines in this currency pair, with upward downward pressures. Any price spike from current levels will offer Forex traders an excellent selling opportunity.
CAD / JPY trading technical configuration – Limited allocation scenario
- Long entry @ 79.200
- Take Profit @ 81.300
- Stop Loss at 78,700
- Upward potential: 110 pips
- Downside risk: 50 pips
- Risk / reward ratio: 2.20