Suggestion for Trade: Buy on daily close above 97.35 (trendline resistance), stop loss 97.15, targets 98.40 and 103.00
CAD/JPY has been trading within a 200 pips range since last two months as shown in the following chart, the pair yesterday gave a positive closing at 97.05 and at the time of writing in Asian session spot is around 97.20.
Major Support & Resistance Levels
The pair is likely to find an immediate hurdle around 97.35 (strong trendline resistance), a break and close above this level may push CAD/JPY into relatively stronger bullish momentum and then this 97.35 resistance shall act as support level.
On downside, immediate support is seen around 97.00 which is 50% fib level of last major move, a break below this level may extend fall up to 96.59 – 96.21 where the pair will find numerous support levels in terms of 55 MA, 100 MA and 200 MA on various timeframes.
MACD is bullish on H4 and daily timeframe with no signs of divergence. We have got bullish crossover of 55 DMA and 100 DMA which is an alert signal for possible bullish reversal, similarly, 55 MA has come above 200 MA at four hour timeframe which is considered a confirmation of bullish reversal. RSI is giving 60-65 readings on hourly, H4 and daily timeframes which means we may not see strong upward surge today and the pair shall find a strong resistance around 97.35.
Correlation with USD/JPY
CAD/JPY is positively correlated with USD/JPY which is also in positive momentum; the pair is hovering around 103.30 at the moment and is likely to find tons of support levels from 103.15 to 102.60. USD/JPY is expected to find an immediate resistance at 103.73 (high of 19/5/2013), the pair will find renewed buying interest above 103.73 resistance area.