Today, we want to have a closer look at a currency pair which will be considered as “exotic” by many traders: CADJPY. With the break below its 2017 and 2018 lows on 2nd January, driven by the JPY Flash Crash, the overall picture in CADJPY doesn’t look very promising or attractive for ‘Long’ engagements, even though CADJPY saw a sharper pullback, mainly driven by the gains recovery in oil prices.
Source: Economic Events 23 January 2019 – Admiral Markets’ Forex Calendar
With this in mind, chances seem higher that a sharper push on the downside may be due, probably initiated by another wave of risk-off hitting the equity markets, but also because the corrective move in WTI seems a little extended on the upside. However, from a seasonal perspective, CADJPY delivers a very attractive long chance, and also in terms of a risk-reward-profile.
In fact, over the last 23 years, CADJPY has increased overall, within the time span from 23 January till 13 February within 20 years (or 87% of the cases), with an average of 151 pips, while on the three occasions CADJPY dropped, it lost on average only 50 pips, with a max drop of only 94 pips. With this seasonality in mind, CADJPY seems to be an attractive long candidate for the upcoming three weeks, at least as long as we trade above 81.00/30, with a potential target to be found around 83.50/70.
Source: Admiral Markets MT5 with MT5SE Add-on CADJPY Daily chart (between 25 November 2017 to 22 January 2019). Accessed: 22 January 2019 at 10:00 PM GMT – Please note: Past performance is not a reliable indicator of future results, or future performance – In 2014, the value of the CADJPY increased by 3.9%, in 2015, it decreased by 15.6%, in 2016 it increased by 0.1%, in 2017 it increased by 2.9%, in 2018 it increased by 10.3%, meaning that after five years, it was down by 18.95%.
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