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Andreas Zanin
Analysis | May 21, 2021

Outlook and forecast: CAD/JPY, AUD/JPY & CHF/JPY

Enclosed are 3 Swing trades in relation to the JPY. In terms of the JPY, it’s the number 1 safe-haven currency and has been weak in a risk-on environment but volatility in the pairs below has dropped and we think the buy of the 3 majors we are looking at v the Yen could be about to exhaust and the Yen could mount a short-covering rally.

In terms of all 3 trade setups below if support levels are broken we are looking for immediate follow-through selling so a weak close to hold the trades. A breakout to new daily highs in any of the setups negates the trade setup. Despite the market being heavily bearish the JPY we are seeing upside price action slow and volatility drop. The drop in volatility is a warning in our view of a potential trend reversal to the downside.

AUD/JPY

The AUD has been generally firm as a proxy risk on currency but despite this background, we have been unable to push to new daily highs and we are sitting above support. If we break below 83.70, we would expect follow-through selling down to 82.00 with a possible run-on down to 80.00.

CHF/JPY

In this pair, we have 2 x safe haven currencies together and we are trying to breakout to new daily highs – If we fail and take out the 121.70 level we would expect a move down to 119.00 then 118.00, stop protection should be well clear of the recent tail highs.

CAD/JPY

The CAD Has been the strongest of the majors in recent weeks and it also a proxy currency to risk on. We have seen upside volatility slow and we think buying could be about to exhaust. A move through 89.70 sets up a potential move down to 88.00 then 86.00.

 

Research provided by LearnCurrencyTradingOnline.com

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