CAD/JPY Price Analysis: Bears setting up to target the 79 area

• CAD/JPY is showing signs of a downside extension giving rise to a shorting opportunity from resistance.
• The price is currently correcting which offers the opportunity of placing a sell limit and fade market. 

Developing story

CAD/JPY is technically bearish from both a daily and 4-hour perspective which gives rise to a bearish analysis and trade setup in the following charts.

From the daily chart, a classic 1,2,3 impulse, correction and impulse is being displayed with the price in the throes of wave 3 to the downside.

This gives rise to a trade entry setup on the lower time frames as illustrated below. 

Daily chart

4HR chart

On the four0hour time frame, the sell limit can be placed at the structure that has a confluence with a 38.2% Fibonacci retracement of the latest bearish impulse which has started to correct. 

In doing so, with a conservative stop loss placed above structure/resistance, there is a 1:3 risk to reward if seeking the point of control since late May’s rally.

This is a level that coincides with the early August support structure.

An alternative way to approach the market would be for an equal risk to reward ratio with a stop loss brought in to 80.58 and to target to only 79.50.

The price action will be monitored from a 4-hour analysis and updates will follow if the sell stop level is achieved with a view to breakeven at the first structural opportunity. 

More to come…