The Japanese currency Yen (JPY) has not had a good run recently, losing to most major currencies. As we know, there is a strong correlation between the yield on 10-year US bonds and the USDJPY pair. On Monday, the US10Y interest rate reached 3.2% and the USDJPY pair set the maximum of this year at the level of 131.40. The last two days are marked by noticeable declines in the US10Y yield and the strengthening of the yen.
What will the Canadian dollar exchange rate do next? CAD/JPY analysis
Corrections have appeared on most pairs with the yen. The situation on AUDJPY and CAD/JPY looks quite interesting. I took a look at the CAD/JPY pair in terms of the PA+MACD strategy and noticed a rather clear signal for a deeper correction. The rate of the pair of the Canadian dollar against the Japanese yen has risen by more than 1350 pips since the beginning of the year, which equates to a nearly 11% loss of JPY to CAD.
The last three weekly candles have long upper wicks, indicating weakening of demand. On the weekly chart the MACD oscillator has entered a downward phase. Comparing historical data – usually the change of mood on MACD heralded that in the following weeks this trend will continue.
On the four-hour chart, a consolidation with an increasingly smaller range appeared taking the form of a symmetrical triangle. Such formations are bilateral and the price can break out in either direction with the same probability, but once such a breakout occurs, it usually continues. Today, the price overcame the triangle support and broke out dynamically to the south.
A good place to take a sell position would be a possible re-test of the defeated support. Will such a re-test take place? We do not know, but any correction towards the mentioned support may be an opportunity to open an order. The closest target for such an order may be the demand zone at 97.40. In the longer term, declines may even reach the support and resistance level at 92.00.
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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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