Hi Traders! CADJPY short term forecast follow up and update is here. On March 1st I shared this “CADJPY Short Term Forecast And Technical Analysis” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
Looking at the H4 chart, we could see that the price which is moving lower has reached a key support zone formed by the 100% (89.101) Fibonacci expansion level of the first wave and the bottom of the range. The price respected this zone and is currently bouncing higher from this zone. Also, the price which was moving lower created a bullish divergence that has formed between the first low that has formed at 89.934 and the second low that has formed at 89.380 based on the MACD indicator. Then the price moved higher and broke above the last high at 90.757 creating higher highs, thus forming a classical setup of bullish divergence followed by bullish convergence. Hence as per the book scenario, after a bullish convergence, we may look for corrections to happen and then further continuation to the upside. Currently it looks like a correction is happening. Until the key support zone (marked in blue) shown in the image below holds my short term view remains bullish here and I expect the price to move higher further.
CADJPY H4(4 Hours) Chart Current Scenario
On the H4 chart, based on the above-mentioned analysis my short-term view was bullish here and I was expecting the price to move higher further after pullbacks. After the bullish convergence, the correction that I was looking for happened with the price reaching a strong support zone, respected it and bounced higher from this zone. Also, in addition to this, there were no signs opposing this short term bullish view. The price then moved higher further as I expected it to and delivered 200 pips move to the upside as you can see in the image below.
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action according to that.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team.
