Can the BOC statement and crude oil rallies spur a bullish break for this pair?
Take a look at this continuation pattern I’m seeing on the hourly chart.
But first, here are the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Japanese Q3 GDP downgraded to 3.6% year-over-year contraction
Angela Merkel to formally step down as German Chancellor today
BOJ’s Amamiya: Outlook uncertain due to Omicron variant
Japanese Economy Watchers Sentiment index up from 55.5 to 56.3
French private payrolls up 0.5% as expected in Q3
Additional COVID-19 restrictions to be imposed in the U.K.
BOC interest rate decision at 3:00 pm GMT
U.S. JOLTS job openings at 3:00 pm GMT
U.S. crude oil inventories at 3:30 pm GMT
RBA Governor Lowe’s speech at 10:30 pm GMT
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: CAD/JPY
Heads up, Loonie traders! I’m seeing a flag formation on the 1-hour chart of CAD/JPY ahead of the BOC decision.
Is a continuation of the rally in order?
Bullish vibes are lookin’ strong for this one, as the pair just recently busted through a descending trend line to signal a reversal from the downtrend.
If it breaks above the current consolidation pattern, a rally of the same height as the flag’s mast could follow.
However, technical indicators are saying that sellers might still put up a fight. For one, Stochastic is just starting to head south from the overbought zone, so price could follow suit.
Also, the 100 SMA is below the 200 SMA for now, which suggests that bearish pressure is in play. Then again, the gap between the indicators is narrowing to hint that a bullish moving average crossover is imminent.
A break below the short-term consolidation doesn’t mean it’s over for bulls, too! Instead, this could be followed by a quick pullback to the broken trend line resistance.
Just make sure you keep tabs on the BOC decision later today since an upbeat statement might spur gains for the Canadian currency.