Is that a reversal pattern I’m seeing on the 4-hour chart of CAD/JPY?
The pair made a couple of failed attempts to close below the 101.60 area, creating a double bottom formation.
Better keep this neckline resistance on your radar if you’re thinking of catching a new trend!
CAD/JPY 4-hour Forex Chart by TradingView
This yen pair is halfway through on its move back towards the double bottom neckline around the 106.00 major psychological level, and a break above the resistance could set off a rally of the same height as the formation.
Will it bounce off the ceiling though?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the Japanese yen and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Strong risk-off flows have been present in the markets these days, as investors continue to react to escalating global trade tensions after the U.S. announced new tariffs last week.
The Canadian dollar, however, appears to be bucking the trend since no additional tariffs were imposed on Canada. Besides, the Bank of Canada (BOC) has shifted to a less dovish stance during its latest policy decision.
Although the Japanese yen has been drawing some support from safe-haven flows, trade risks for Japan also seem to be limiting the currency’s gains. Still, keep an eye out for reversal candlesticks around the neckline resistance and R1 (105.21) as these could suggest another dip back to the lows near S1 (101.63).
On the other hand, long green candles reflecting sustained upside momentum could take CAD/JPY to the next bullish targets at R2 (107.12) then R3 (108.79).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
