CAD/JPY’s traditional position in the currency market universe is alignment as a risk pair measurement. The big 4 risk pairs are situated as CAD/ZAR, CAD/JPY, AUD/CAD and EUR/JPY. In CAD/ZAR and AUD/CAD are risk off pairs while CAD/JPY and EUR/JPY are risk on pairs.
Taken to the next level, CAD/ZAR and AUD/CAD are essentially USD pair evaluatrs while CAD/JPY and EUR/JPY align to EUR/USD in the risk on universe. Longs in EUR/USD for example generally see or should agree in CAD/JPY and EUR/JPY. Failure in agreement provides warning to EUR/USD longs as range conditions may persist as the market order.
Taken to further extremes as CAD/ZAR and AUD/CAD are USD measurements to commodities. Now the big 4 become insights to trades in commodities as USD traditionally correlates to commodities, particularly agriculture because this is where markets began after WW 1 and not one iota of change occurred to present day.
AS USD and DXY suffered severe downside effects since Trump’s election and through 2017, CAD/JPY embarked on a serious near 2 year downtrend.
. At 81.00’s and 82.00’s, CAD/JPY is not only Richter scale oversold and a severe on -the – floor low price but CAD/JPY fails to register on a 20 year chart as 81.00’s and 82.00’s are light years below its nearest break points at 84.71 and 85.27. A similar failed to register situation is seen in AUD/EUR as another example of a USD/ DXY pair. The DXY downtrend hit most particularly the USD cross pairs.
On the floor for CAD/JPY informs not much downside exists and traders should refrain from consideration to even 1 pip shorts in CAD/JPY. The daily scenarios comply against longer term views in oversold and low prices. CAD/JPY is severely oversold from 84.00’s, 85.00’s, 88.00’s and 90.00’s. CAD/JPY fell to far and to fast.
The 2018 scenario viewed opposite correlations in CAD/JPY vs USD/CAD as USD/CAD followed movements in EUR/USD and this sent CAD/JPY to the floor. To long USD/CAD is a sell CAD and CAD/JPY suffered the effects as its current situation is mispositioned against EUR/USD and USD/CAD.
The first CAD/JPY targets are located at 84.71 and 85.27. Above 85.27 is located next target points at 86.49 and 86.70. CAD/JPY 87.00’s are many and rough to begin at 87.13, 87.35, 87.62 and the 10 year average at 87.55. A break at the 10 year average represents a period change and not expected anytime soon as new market cycles would commence to place currency markets inside a whole new dimension.
CAD/JPY’s rise for now represents a serious correction higher unless a break is seen at 87.00’s.