DonaldDuck
Long

CAD/JPY due to rally in Q3-Q4

FX_IDC:CADJPY   CANADIAN DOLLAR / YEN
346 7 6
Technical Analyses

So my reasoning for a Long Position on the CAD/JPY             , like all good positions started off with bigger picture thinking.
There is often a Chinese proverb I think of before I make my trade, that goes "to know what is inside, you must know what is outside" - Chinese proverb.

Starting with the weekly Dollar Yen chart, I originally saw an opportunity using my linear regression channels, based on a 50,100, and 200 period. Combined with the SMA200 which we sit above on the weekly and monthly chart.

Price Action has indeed touched the lower of the LR200 Channel of the weekly chart, while the LR200 still remains in an uptrend.

The weekly chart has given me my long term position strategy. Going into Q4.

Fundamental Analyses

I quite enjoyed the recent meeting minutes from the Bank of Canada, on there monetary policy report released July 2015. I am going to quote some of the recent meeting minutes to help you.

As per meeting minutes, Page Thirteen, Paragraph 4;
"The Bank expects real GDP growth to resume in the third quarter. While business investment in the energy sector will likely contract further, growth will be supported by a partial recovery in exports and by federal fiscal stimulus, which should boost consumption. Starting in the fourth quarter, real GDP growth is expected to exceed potential as the drag from the resource             sector dissipates and the recover in the non-resource sector strengthens. On an average annual basis, real GDP is projected to grow by just over 1 per cent in 2015 and about 2 1//2 per cent in 2016 and 2017'.

To quote as per Page 22 of the Monetary Policy Report 5th paragraph;
"Several factors point to a resumption of growth in the third quarter and further strengthening later on. The bank anticipates that the non-resource track for growth will begin to dominate in the third quarter and that the economy will expand by roughly 1 1/2 per cent. Consumption is expected to accelerate as household disposable income receives a boost from retroactive federal payments to families with children. Importantly, exports are projected to return to solid growth, supported by continued improvements in the U.S. demand and a rebound in automotive exports following temporary shutdowns for retooling at the beginning of the year. Business investment will remain a source of drag, however, as the energy sector continues to adjust to low oil             prices'.

-Economy is expected to expand by 1 1/2 per cent third quarter.
-Real GDP growth expected to resume in third quarter with further strengthening.
-Consumer Confidence remains high, save the pullback from oil             producing provinces.
-Non-resource sector employment has showed continued growth.
-Manufacturing activity picking up.
-Foreign demand improving.
-Interest Rate at %0.50
The Bank of Canada also expects inflation to return to %2 in the first half of 2017.

Now we take some time to view the Bank of Japans Meeting Minutes released on July 21st.
I will keep this short and sweet.
-In the money market, interest rates on both overnight and term instruments
continued to be at low levels.
-Inflation levels rising as a result of qualitative and qualitative monetary easing (QQM) (Higher inflation means downward pressure on currency value)
-Interest Rate at 0.10%
-The Bank will continue with (QQE)

My position is long, looking for healthy Canadian Q3 GDP reports and economic expansion as the economic contraction in the oil             industry becomes less of a drag on overall economic indicators. Japan is still increasing inflation rates as Canada is waiting for 2016-2017. Furthermore does Canada hold a higher interest rate at 0.5% compared to Japan at 0.10%. I will be looking to take profit from this position going into 2016.

If you liked my report, please do not forget to click like at the bottom and post a comment.

-DonaldDuck
Forexwolf1
a year ago
Very good explanation of your thoughts and I believe a good trade. Great report also. Thank you for your time to share with us!
+1 Reply
DonaldDuck Forexwolf1
a year ago
Thanks Forexwolf1, I look forwards to keeping in touch and working togethor
Reply
DonaldDuck
a year ago
I have drawn a 4hour chart to show the smaller movements within our weekly chart. I have drawn a fib retracement from recent highs in June 2015, to recent lows. We have moved up the Andrews Pitchfork which is measured from last months highs, to most recent lows. We have tested the .23 fib line twice and failed bringing the price into Andrews lower channel. The LR200 is showing a downtrend still in effect. I am still long in this position. If we break below 94.50 this will be Bear Invalidation. I will look for profit as we break above the .23 line and break the LR200 upper channel.

Commitment of traders reports, a bearish sentiment on the JPY

Traders in Financial Futures - Options and Futures Combined Positions as of August 11, 2015
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Dealer : Asset Manager/ : Leveraged : Other : Nonreportable :
Intermediary : Institutional : Funds : Reportables : Positions :
Long : Short : Spreading: Long : Short : Spreading: Long : Short : Spreading: Long : Short : Spreading: Long : Short :
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JAPANESE YEN - CHICAGO MERCANTILE EXCHANGE (CONTRACTS OF JPY 12,500,000)
CFTC Code #097741 Open Interest is 296,436
Positions
152,467 3,335 8,342 20,947 55,670 3,593 23,546 128,400 17,965 47,281 12,566 4,523 17,772 62,041

Changes from: August 4, 2015 Total Change is: 10,118
17,788 -13,395 -2,326 1,196 773 -1,474 -3,470 21,458 -883 -2,100 1,468 -425 1,811 4,921

Percent of Open Interest Represented by Each Category of Trader
51.4 1.1 2.8 7.1 18.8 1.2 7.9 43.3 6.1 15.9 4.2 1.5 6.0 20.9

Number of Traders in Each Category Total Traders: 135
13 . 7 11 20 12 17 50 21 7 14 6
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DonaldDuck
a year ago
snapshot
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DonaldDuck DonaldDuck
a year ago
4 Hour Chart Here.

I am still holding Long.
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DonaldDuck
a year ago
140 pips lossed
Reply
DonaldDuck
a year ago
I have since bought back on the retrace, and am currently recovering from losses.
My entry was on the 4 hour chart, based on the needle bottom candles entering into, the LR200 with a MacD cross. Also, we know market fluctuations move in impulse waves, and most importantly, corrective waves.
snapshot
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