Hi Traders! CADJPY technical analysis and forecast post is here. The way I would like to analyze the chart for setups is based on multi-timeframe confirmations because in my POV if we get more evidences on different timeframes for the same direction then it makes the setup much more reliable. 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! here). Now, let’s start our analysis from the highest timeframe which will be the daily chart here.
On the daily chart, we have a range that has formed which started on 5th June 2020. This range is formed by the highs and lows reaching parallel support and resistance zones. The price which is moving inside this range has currently reached the top of this range, respected it and is moving lower. We also have a bearish divergence that has formed between the first high that has formed on 10th December 2020 and the second high that has formed on 14th January 2021 based on the MACD indicator which we may consider as evidence of bearish pressure. Also currently there are no signs opposing this bearish view. So everything looks good here for the bears and we may now move down to one timeframe lower and see if we can find evidences supporting this bearish view.
On the H4 chart, the price has created a bearish divergence between the first high that has formed on 10th December 2020 and the second high that has formed on 14th January 2021 based on the MACD indicator. Then the price moved lower and broke below the low at 81.230 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence. Hence as per the book scenario, after a bearish convergence, we may look for corrections to happen and then further continuation to the downside. Currently, it looks like the correction that we were looking for is happening. In addition to this based on the Stochastic Oscillator, we could see that the price has reached its extreme which we may consider as evidence of bearish pressure. Until the top of the daily range holds my view remains bearish here and I expect the price to move lower further.
CADJPY D1(Daily) Chart Analysis
CADJPY H4(4 Hours) Chart Analysis
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also, don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
You will also find a pretty extensive database of educational materials here in the blog – just use the search or check out the Forex Education section above.
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To your success,
Vladimir Ribakov
Certified Financial Technician
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