The daily chart for CAD/JPY shows that since forming a bullish ABCD pattern on August 8th at the 92.74, price has maintained a strong bullish rally that is currently facing key resistance with the 50-day SMA. This morning, Statistics Canada released Wholesale trade 0.6% to $53.0 billion in June, a third consecutive increase. The gains were led by wholesalers of logs and wood chips, minerals, ores and precious metals, and second-hand goods. CAD/JPY rallied from 94.25 to 94.46 after the release.
The recent slide with oil prices have hurt the Canadian crosses and if oil can find support before the 90 handle, the loonie may be poised to have a significant rally. The other key driver is monetary policy and no changes are expected by the Bank of Canada in the near future.
The trade: Buy CAD/JPY at 94.40 with a stop loss at 93.90 and a take profit at 95.95. The Risk/Reward Ratio is around 1:3
Edward J. Moya
WorldWideMarkets Online Trading