Timeframe: H4 Recommendation: Long Position
Entry Level: Long Position @ 93.25
Hedge Level: Sell Stop Order @ 92.50 (Take Profit Level @ 91.25)
Take Profit Zone: 95.00 – 95.50
Stop Loss Level: 92.50 (We will not use a stop loss order to close this trade for a loss and execute this trade as advised below). We do use stop loss orders to protect our profits and close a trade for a profit. Each trader may decide if and where they would like to place the order.
The CADJPY has corrected as visible in this 4-hour chart (H4). This currency pair has now formed a falling wedge formation as marked by the blue lines in the above chart. We expect the CADJPY to rally back up to its resistance zone which is marked by the light red box in the above chart.
MACD has formed a positive divergence which is a bullish sign and indicates a potential reversal rally. In addition MACD shows a gap between the histogram and moving average as marked by the light blue circle in the above chart. RSI is trading in extreme oversold territory and a breakout from this condition should further fuel the rally while it also formed a positive divergence.
We recommend a long position at 93.25 with a potential second entry level at 91.25. We also recommend a sell stop order at 92.50 with a take profit target of 91.25 in order to hedge our long position and before adding new long positions to this forex trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 92.50. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 95.25.
Here are the reasons why we call the CADJPY currency pair higher:
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