CADJPY is currently trading within a clean descending channel on the 4H chart, offering a classic technical setup for a potential bullish breakout. The pair has been consolidating for several sessions within this structure, making higher lows off key support. The channel is acting as a controlled retracement in a broader uptrend, and price is now reacting from the lower boundary—indicating a strong possibility of a bullish reversal toward the upper zone near 202.70.
Fundamentally, the British pound remains supported by strong wage growth and persistent inflation, which keeps the Bank of England on alert for further rate action. Traders are pricing in the potential for policy tightening to continue or remain elevated longer than expected. In contrast, the Japanese yen stays under pressure due to the Bank of Japan’s ultra-loose stance and its reluctance to normalize interest rates, especially after the latest BOJ meeting reaffirmed dovish policy despite a weakening yen.
The technical setup aligns perfectly with the fundamental landscape. CADJPY is positioned to benefit from yield differentials and risk-on sentiment in the market. A clean breakout above the channel resistance around 199.50 could trigger a wave of bullish momentum, targeting the 202.70 zone and potentially higher if bullish fundamentals persist. The current support zone around 197.40 serves as a tight invalidation level, providing a favorable risk-to-reward for swing buyers.
With this descending channel structure and macro tailwinds favoring strength and CADJPY weakness, I'm anticipating a breakout soon. This setup is one to watch closely, as it blends technical precision with fundamental divergence—a high-probability scenario that aligns with my trading plan.
Fundamentally, the British pound remains supported by strong wage growth and persistent inflation, which keeps the Bank of England on alert for further rate action. Traders are pricing in the potential for policy tightening to continue or remain elevated longer than expected. In contrast, the Japanese yen stays under pressure due to the Bank of Japan’s ultra-loose stance and its reluctance to normalize interest rates, especially after the latest BOJ meeting reaffirmed dovish policy despite a weakening yen.
The technical setup aligns perfectly with the fundamental landscape. CADJPY is positioned to benefit from yield differentials and risk-on sentiment in the market. A clean breakout above the channel resistance around 199.50 could trigger a wave of bullish momentum, targeting the 202.70 zone and potentially higher if bullish fundamentals persist. The current support zone around 197.40 serves as a tight invalidation level, providing a favorable risk-to-reward for swing buyers.
With this descending channel structure and macro tailwinds favoring strength and CADJPY weakness, I'm anticipating a breakout soon. This setup is one to watch closely, as it blends technical precision with fundamental divergence—a high-probability scenario that aligns with my trading plan.
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Join our Forex Community Telegram group and connect with thousands of traders.
Hit the Link below
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.