CAD/JPY Once Again

Tim Black hosts the live trading room for the Asia trading session. His background is in computers and technology. He is addicted to charts and technical analysis and enjoys teaching and sharing his viewpoints in these areas. If you would like to trade with Tim click here.
CAD/JPY did what I expected this past week, even coming within pips of our second target with the help of the Bank of Japan. But it did it without me. If you guys followed me on Twitter this week, you’ll know I didn’t get in this trade because it sorta spooked me the way it pushed back down through the trend line. Hopefully, some of you didn’t follow my tweets and made some pips on this trade.
Well, I’m still bullish on this pair but with the move it made this week, it’s going to have to do a little retracing before I get in it. Here’s what I propose:

CAD/JPY Weekly

Just like last week, there are three nice piercing bars into the support zone. It’s also still making higher lows and now there is a nice confirmed weekly buy signal.

CAD/JPY Daily

I’m going to look for this to retrace to the 61.8% Fibonacci level (around 81.92.) Then I’m going to WAIT until I get a confirmed 4 hour buy signal (a 4 hour candle that CLOSES higher than the prior candle) to get in long. I will place my stop below the 78.6% Fibonacci level (near 81.30) and target just below the recent high (near 84.00), the measured move (harmonic AB=CD, near 85.40) and the recent swing high near 86.20. This will give us a better than 3:1 Reward:Risk ratio.
ENTRY: Long on 4 hour buy signal near 61.8% retracement around 81.92.
STOP: Below the 78.6% retracement near 81.30.
TARGETS: 84.00, 85.40 and 86.20.
RR: Better than 3:1.
Remember to use your risk management rules in sizing your trade. And I know you’re very tired of hearing me say this WAIT, WAIT, WAIT for the proper entry. Just because I’m calling for an entry below the current level, doesn’t mean that a short to that level is a high-probability setup. What I’m saying is IF price action gets to the 81.92 level THEN a buy MIGHT be appropriate with the indicated signals.
Follow me on Twitter as I will tweet trade management for this trade.