Hi Traders! CADJPY short term forecast update and follow up is here. On July 26th I shared this “CADJPY Technical Analysis And Short Term Forecast” 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
On the H1 chart, we could see that the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows we may consider this as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently, it looks like the correction that we were looking for is happening. In addition to this, we had a bearish hidden divergence that has formed between the first high that has formed at 107.056 and the second high that has formed at 106.483 based on the MACD indicator, followed by a bearish regular divergence between the first high that has formed at 106.483 and the second high that has formed at 106.626 based on the MACD indicator, we may consider this as other evidences of bearish pressure. Also, we had two strong support zones and the price which was moving lower has broken below these zones and holding below them. We may consider this as yet another evidence of bearish pressure. Currently these two strong support zones are acting as two strong resistance zones for us. Until both these resistance zones hold my short term view remains bearish here and I expect the price to move lower further.
CADJPY H1(1 Hour) Chart Current Scenario
In this pair my short term view was bearish and I was expecting the price to move lower further until the two strong resistance zones hold. The price action followed my analysis exactly as I expected it to here. After the bearish trend pattern, the price which was moving higher reached the first strong resistance zone, respected it and then it bounced lower from this zone. The price then moved lower further and has delivered 500+ pips move to the downside as you can see in the image below!
On the H1 chart, the market provided us with various facts supporting the bearish view. After the bearish trend pattern, the correction that we were looking for happened in the form of double wave to the upside. Also, the price which was moving higher created a bearish divergence between the first high that has formed at 106.626 and the second high that has formed at 106.638 based on the MACD indicator, which we may consider as evidence of bearish pressure. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further and provided an amazing move to the downside!
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
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
