CAD/JPY is in a short-term uptrend, as seen on the channel connecting the highs and lows of price action on the 1-hour time frame. In fact, the pair just came off a test of the channel support and bounced but it is finding resistance at the 93.00 major psychological level.

A double bottom pattern can be seen as the pair attempts to make another test of 93.00. An upside break could confirm the likelihood of more rallies, with the potential of reaching the channel resistance at the 94.50 to 95.00 psychological resistance levels.

Stochastic is pointing up, indicating that there’s enough buying pressure to trigger more rallies. However, if the 93.00 mark holds, another test of support could be seen. Going long above the 93.00 mark with a stop below the bottom of the channel and a target at 95.00 could yield a 1:1 return on risk for a quick day trade.

By Kate Curtis from Trader’s Way