CADJPY - top down analysis Monthly, Weekly, Daily
The monthly timeframe reveals a triangle with a downwards Shifting Point of Control (SPOC). The price spends most of the time below SPOC. There is only one pro-longed oscillation above the level which later found resistance at the round number of 100 it failed to hold.
The most recent price action shows a rejection of above-90 levels as sellers took advantage of this price and started pushing CADJPY lower.
March 2020 candle stands out on the volume indicator. The candle itself is smaller than on other pairs. Perhaps, its, because the price was nearing bottom levels, and some investors stayed strong through a stock crash. Should there be another correction on the stock market, CADJPY is likely to go down as it did in the 2008 crisis, from which the pair never recovered. On the other hand, the down candle clearly violates Wyckoff's law of effort vs. result, and to interpret it properly, I will inspect a lower timeframe.
Zooming in on the latest red candles, the weekly chart has all the details. The price attempted to make another higher high after it retraced lower and failed. A lower high was formed instead. Then, the price continued below the support and should create our first lower low at some point. Then, it might or might not retrace back to the structure around 88 which would be my entry if I decided to trade based on this timeframe.
Notice the volume of March 2020 candles. This brings a lot more clarity to the massive volume. Even though there was a lot of selling at a time, buyers were stalwart-strong and did not let the pair go lower. A takeaway from this is that although stock market drops will increase the selling activity on CADJPY, it probably isn't the best pair to speculate on during the crisis, because there are many willing to defend it.
Look right and see the red "M". This is my note table. I created a red "M" to remember that the Monthly timeframe looks bearish. As we move towards daily, a gray "W" will appear on the chart. The weekly timeframe is bearish, but a retracement to the structure around 88 is expected. On top of that, selling now would be chasing the price and that is wrong!
The daily chart brings bad news as it shows that the would-be weekly entry level has already been retested. That was the best possible entry in advance of the coming downtrend. I missed it myself. The best we can hope for is that the price comes back closer to the second Lower High. The entry does not have to be perfect - a monthly chart is on our side too. But it definitely has to be good. Not bad, not slightly bad. It needs to be good!
The volume-based analysis involves one high-volume candle which definitely violates Wyckoff's effort-result law. The price movement isn't as big as it should be based on consumed volume. However, I think the volume supports my analysis later and the most recent price action is always the most relevant, also.
Look at the 5 last days. With the exception of Friday, the volume has increased every day and the price movement to the downside increased as well. This means that new bears are entering the arena and the trend has just started. If there is a retracement (and an entry opportunity), it shouldn't beat the biggest red candles volume-wise - but that is up to future analysis.
Keep in mind that the price hit 200 daily Exponential Moving Average today. That could lead to an opportunity.
"D" on the chart will be slightly red. I expect more selling, but the price has already dropped a lot, and it is on 200 EMA. It may retrace this week.
Potential entry
I left the purple area on the chart. That's an entry I would like to take if the price gets back up. A candlestick reversal formation needs to appear before entering short. Pinbar, engulfing or even three-bar rejections are ok.
