CAD/JPY Daily Price Forecast – 13th January 2025

CAD/JPY Daily Price Forecast – 13th January 2025

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Trade Summary:

CADJPY
Sell Stop @ 109.126
TP @ 108.743
SL @ 109.589

Detailed Analysis for CADJPY:

1. Overview of the Trade Setup:

• Sell Stop Level: 109.126

• Stop Loss (SL): 109.589

• Take Profit (TP): 108.743

This trade setup is based on a bearish momentum confirmation, with the price breaking below a key support level. The setup aims to capitalize on a continuation of the downward trend.

2. Key Technical Indicators:

• Momentum Power:

  • The momentum power is negative (-0.03782500), indicating bearish sentiment in the market. This supports the decision to place a sell stop order.

• Price Action:

  • The price is close to the round level 109.200, which is a significant psychological level. A break below this level confirms bearish momentum.

  • The candlestick patterns suggest a rejection of higher prices, with sellers gaining control.

• Moving Averages:

  • The price is trading below the 200-period moving average (blue line), which indicates a bearish trend.

  • The 50-period moving average (green line) is also sloping downward, further confirming the bearish bias.

• Support and Resistance Levels:

  • Resistance: The resistance level at 109.589 (SL) is well-placed above recent highs, allowing room for minor retracements.

  • Support: The support level at 108.743 (TP) is a logical target, as it aligns with previous price action and a potential demand zone.

3. Risk-to-Reward Ratio:

• Risk: The distance between the Sell Stop and the Stop Loss is 46.3 pips (109.589 – 109.126).

• Reward: The distance between the Sell Stop and the Take Profit is 38.3 pips (109.126 – 108.743).

• Risk-to-Reward Ratio: Approximately 1:0.83. While slightly below the ideal 1:1 ratio, the trade is still valid due to strong bearish confirmation.

4. Trade Justification:

• Bearish Momentum:

  • The negative momentum power and price action near the round level 109.200 suggest a strong likelihood of a bearish breakout.

  • The candlestick confirmation aligns with the sell stop order.

• Trend Alignment:

  • The price is below the 200-period moving average, confirming a bearish trend.

  • The moving averages and price structure indicate that sellers are in control.

• Logical Stop Loss and Take Profit:

  • The Stop Loss is placed above the recent resistance level, allowing for minor retracements without invalidating the trade.

  • The Take Profit is placed at a logical support level, ensuring a realistic target.

5. Potential Risks:

• False Breakout: If the price fails to sustain below 109.126, the trade could be invalidated.

• Market Volatility: Sudden news or events could cause unexpected price movements.

6. Summary of the Trade Setup:

• Sell Stop: 109.126 (below key support level to confirm bearish momentum).

• Stop Loss (SL): 109.589 (above recent resistance to allow for retracements).

• Take Profit (TP): 108.743 (at a logical support level).

This trade setup is well-aligned with the bearish trend and momentum, offering a high-probability opportunity to profit from a continuation of the downward move.

Recommendation: Proceed with the trade setup but consider adjusting the Stop Loss or Take Profit levels to improve the risk-reward ratio if market conditions change.

Recommended Lot Size

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It’s widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it’s easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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