- The Canadian dollar has fallen significantly during the trading session on Wednesday, breaking back below the crucial ¥160 level, but at this point, the market still has a lot of noise underneath that could come into the picture and offer support.
- The 200 Day EMA has been broken below over the last couple of days, and therefore you have to be able to recognize the fact that the sellers are coming into the market and are pressuring things.
- That being said, the market is likely to recognize the 50 Day EMA underneath as support, because we have seen buyers in that general vicinity.
Technical Analysis
The technical analysis for the pair is in a state of flux at the moment, because we are in fact trying to break out and go to the upside. If we can clear the recent high over the last couple of days, then it’s likely that we go looking to the ¥110 level after that. The ¥110 level is a large, round, psychologically significant figure that a lot of people will pay attention to, but I think it’s going to take a while to get there.
If we were to break down below the 50 Day EMA, then it’s likely that the market could drop down to the ¥104 level, or perhaps even the ¥103 level. All things being equal, you have to keep in mind that the Japanese yen is considered to be a major “safety currency”, so if we get some type of major risk aversion type move around the world, this is a pair that probably continues to fall from here. All things being equal, this is a market that I think will continue to be very noisy, but the interest rate differential favors the Canadians ever so slightly, and that is something that you have to keep in mind as well.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
