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CADJPY Selloff to be Short-Lived as Downside Risks Remain Capped by 81.80

CADJPY Selloff to be Short-Lived as Downside Risks Remain Capped by 81.80

2011-02-03 16:30:00
Michael Wright, Currency Analyst
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Potential 24 Hour Setups

Currency Pair

Potential Target

Pivot Support

Pivot Resistance

Pending Long CADJPY @ 81.7

82.50

81.43

83.40

*Trade updates during the course of the day will be provided through our real time news page.

Review of Price Action on the Previous Day’s Trade

Currency

Entry

Potential Target

Close

Short EURUSD

1.3805

1.3770

1.3770

*Note: EURUSD short is from the last updated report on Thursday

The CADJPY pushed lower during Thursday’s trade as the yen benefited from its safe haven status. Indeed, crude oil pared yesterday’s gain; however, it is worth noting that downside risks in the energy commodity remain capped by the 20-day simple moving average, hinting at a possible turn around. Thus, I will look for buying opportunities as my bias for the pair remains to the upside. Tomorrow, CAD traders will shift their focus to the Canadian employment report which will be released at 12:00 GMT. As of late, economists are forecasting the labor force in Canada to rise 15.0K in January. Therefore, a better than expected report will validate a slight turnaround in the CADJPY. If price action moves in our favor, make sure to place a trailing stop in order to avoid any unforeseen losses.

CADJPY 4 Hour Chart

Intraday_Trading_02.03.11_body_cadjpy.png, CADJPY Selloff to be Short-Lived as Downside Risks Remain Capped by 81.80

Charts Created Using FXCM’s Strategy Trader

Close: 82.62

Retail positioning relates to our speculative sentiment index which illustrates where traders are at in the market. The larger the retail positioning is within the highlighted area, the more likely it is that longs exceed shorts or vice versa. We will look to use this indicator in conjunction with other technical developments to dictate price action over the next 24 hours.

Every day at 16:00 GMT, we analyze potential 24 hour trade set ups. The trade is no longer valid if it is not triggered by 16:00 GMT the next day. Good luck trading!

Written by Michael Wright, Currency Analyst

To Receive Future Articles by Email, please contact me at instructor@dailyfx.com

Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, Intraday Trading, and Forex Trading Weekly Forecast

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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