Everyone at the moment is talking about the upcoming FOMC decision and whether or not it will see a new round of economic stimulus announced. With the extraordinary amount of news sensitivity that is around at the moment I have been spending more of my time than usual looking to the cross rates to reduce some of the USD-centric responses from the market. Not that this is any sort of panacea for being wrong but at least it happens in a more stable environment – which is certainly turning a frown upside-down.
On to the main event though – here is why the CADJPY is interesting:
The most obvious takeaway on the daily chart is the upward sloping channel that is visible now which gives the trader a sign of the prevailing direction – key to this though is that fact that a break to the high or the low side will give a clear sign of trend acceleration or deceleration.
I think there is good signs for acceleration. If you look at the 50 period Bollinger Bands you can see the price is holding above the upper band. While this is the case and the bands are sloping higher it provides a bullish sign for traders.
On the hourly chart I think that things are a tiny bit more delicate. As you can see the rate is really weighing on the short-term trend line and is below the +1.25 SD band of the 200 hour MA. I think for this to be showing decent momentum the trader would be looking for the rate to get above this level as a minimum. For a little more life I think seeing the 50 period MA also pointing in the right direction would be a boon too.
So keep an eye on these levels as they will be telling on the near term future. Whilst the daily chart look really promising, waiting for a good entry on the hourly can help you no end with your position sizing and risk management.