CADJPY continues its run higher after the BOJ decision to keep its massive stimulus program untouched. The bank warned of risks to economic recovery from the Russia-Ukraine war and confirmed expectations the central bank will remain an outlier in the global central bank community. The BOJ keeps the stimulus tabs flowing while other central banks tighten their monetary policies. While this pressures the JPY, high inflation keeps the commodities markets bid (and, due to the Russia-Ukraine war, the price of oil has more upside than downside risk) which supports the CAD. No wonder the currency pair is flying higher. Heads up for Canadian retail sales numbers later on today. This report includes only two trade ideas but I will post other ideas in Telegram as I see them emerging. You can access the TIOmarkets Telegram channel via this Link. By reading further, you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.To get more news about tio market review, you can visit wikifx.com official website.
I have included Target 1 (T1) and Target 2 (T2) levels (or ranges) in this analysis so that you have an idea of how far the market would probably move if price action supports my trade ideas. The target one is a high probability target while the next target is further away and therefore there’s a greater risk that the market doesn’t reach the level. While I don’t provide investment advice my analysis helps you in your own market analysis and then you can decide how to trade the markets.
CADJPY When a market is in a strong uptrend, it’s impossible to estimate how far it might go (the trend is your friend until the bend in the end). This is why at this stage I just prefer to point to the facts on the ground, so to speak, and highlight the fundamental drivers behind this rally. Therefore I don’t make any predictions on how far the market might move.
I’d be delighted to buy this market on retracements to supports (if price action at retracements confirms the idea). As always, it’s good to know where the nearest key support levels are. The nearest support is near the 38.2 retracement level and a recent penetrated swing high and the SMA(20). They all coincide at the 94.04 – 94.06 range. The next key area below is the 93.88 – 93.93 range (a 50% retracement level). I think this market is bullish above 93.78 and if there’s decisive buying after a possible retracement is over, then my T1 is at 94.20 – 94.50 range and if the resistance at the latest high is successfully cleared then the market could rally to 95.00 – 95.50. Alternative scenario: CADJPY doesn’t respect the supports and trades below 93.77 which would turn the market technically bearish and could take it down to 93 or so.
DAX has rallied strongly and after hitting and exceeding the target I gave on March 9th there’s now some loss of momentum. The negative commentary regarding peace negotiations from both Russian and Ukrainian representatives have soured investors’ mood. If DAX breaks the 14242 support, my T1 is at 14186 and T2 at 14120. Alternative scenario: Dax breaks above 14417 and rallies. Then my T1 is at 14470 and T2 at 14525.
Macro Drivers for the USD As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.
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