USDCAD and USDJPY Intermediate-Term Bear Trends Intact, but Under Threat

USDJPY Chart Screenshots 2018-10-28

  • In our 18th October report here we highlighted USDJPY upside risks but a still bearish USDCAD
  • For USDCAD, despite erratic activity in latter October since the Bank of Canada rate hike, the broader US Dollar rally this month during the recent “risk off” phase, has seen the USDCAD FX rate push through important resistances and threaten an intermediate-term shift from bearish to bullish above 1.3226.
  • Erratic October activity has seen USDJPY flip between reinforcing and rejecting the intermediate-term bear theme, BUT we still see growing risk for an intermediate-term shift from bearish to neutral above 112.89. 


Upside risks

A firm upside follow-through Friday above the 1.3132 swing peak, to reinforce Thursday’s rebound through the 1.3100 resistance barrier, fully rejecting negative forces from Wednesday’s plunge (to probe the up trend line from early October, after a more hawkish tone than anticipated from the Bank of Canada), and despite a setback Friday to keep the bias higher for Monday.

We see an intermediate-term bearish theme, BUT still see growing threat for an intermediate-term bullish shift above 1.3226.

For Today:

  • We see an upside bias for 1.3160; break here aims for 1.3198, maybe towards key 1.3226.
  • But below 1.3060 opens risk down to 1.3022/11, maybe 1.2966.

Intermediate-term Outlook – Downside Risks: Whilst below 1.3226 we see a downside risk for 1.2725.

  • Lower targets would be 1.2536, 1.2250 and 1.2062/00
  • What Changes This? Above 1.3226 shifts the intermediate-term outlook straight bullish.

Resistance and Support:

1.3160 1.3198* 1.3226*** 1.3247 1.3290***
1.3060 1.3022/11* 1.2966* 1.2912** 1.2885*

4 Hour Chart

USDCAD Chart screenshot 2018-10-28


Rebound bias

A plunge lower Friday through the channel support from mid-October and also the swing low at 111/59, BUT then a firm intraday rebound to try to reject a more negative tone and keep risks for a further rebound Monday.

We see an intermediate-term bear trend, BUT see growing risks for an intermediate-term shift back to neutral above 112.89 area.

For Today:

  • We see an upside bias for 112.23; break here aims for 112.74 and now key 112.89 level.
  • But below 111.51 opens risk down to 111.35, maybe then 111.09/01 area, which we would again look to try to hold.

Intermediate-term Outlook – Downside Risks: We see a downside risk for 110.36 and 110.00.

  • What Changes This? Above 112.89 shifts the outlook back to neutral; above 114.55 is needed for a bull theme.

Resistance and Support:

112.23 112.74* 112.89*** 113.09 113.28/39***
111.51 111.35** 111.09/01** 110.71 110.36***

4 Hour Chart

USDJPY Chart Screenshots 2018-10-28

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.