This morning we have two potential breakout trades taking form. The USDJPY is once again below 79.00 and has fallen back towards yesterday’s lows. In a similar vein, the USDCAD has been trendling lower but has been unable to break below 1.0190. Both of these pairs could see a downside breakout if their support levels are broken.
USDJPY: The pair jumped higher to open the week following the Greek election triggered risk rally. However, with fear returning to the EU, the pair has been unable to above the 79.00 figure. Last week, we saw the USDJPY also find support above 79.00 before finally breaking below that level and hitting a low of 78.60. As such, if the current short term support at 78.82 fails to hold, it could trigger a downside breakout to last week’s lows. Beyond that level, momentum could take it to the low 78.00’s.
USDCAD: Unlike the NZD & AUD which have been breaking out against the USD, the CAD’s gains have been limited. Currently, the pair is finding support just below the 1.0200 figure, even as it has been trending lower. The current trading conditions have created a triangle trading pattern which could ultimately lead to a breakout lower if 1.0200 support fails (see chart). Its worth watching price of Gold which have been range bound over the last few days, but are currently trading at 1630, their upper range. If Gold finds momentum, it could lead to demand to in the CAD and trigger a move lower in the USDCAD.
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