CAD/JPY Update

Here is a 4 Hour Chart of the CAD/JPY pair, which I have been watching closely for some time now. In my opinion there have been very few obvious trades over the past few weeks, as price has been very volatile in some markets (EUR/USD for example) and very sluggish in others. I have adjusted my C wave count slightly as you can see in the chart, to better fit with recent price action. Obviously the ED I was following has not completed yet as we have not yet had a sharp fall to the downside. This adjusted count sits much better with Fib ratios than my previous expanding ED one, with waves 1 and 3 being almost exactly equal in length, and wave 5 expected to be around 61.8% of the size of both of the aforementioned.

Here is a 15 minute close-up of the contracting ending diagonal which I now think is nearing completion. Canada's CPI figures come out in the coming US Session which I think will be the perfect catalyst for a sharp fall from current levels and the beginning of a large wave 3 down for the pair. Following are a few more indicators suggesting this pair is about to fall sharply.

Here is a daily chart of CAD/JPY shown with the ATR (Average True Range). As you can see the ATR has fallen to almost as low as the levels of late 2008, just before the massive surge in the price of the pair. This tells us that increasing volatility is likely in the near future.

Here is an hourly chart of the pair, showing multiple divergences in RSI (Relative Strength Index) where CAD/JPY made a new high but the RSI did not. This is just an example of the divergence we are seeing across the board. There are many more examples of divergence across all time frames, which all point to a nearing top forming in the pair.

Another reason I favour this trade so highly is the incredible Risk to Reward ratio it offers. Stops should be placed just above the double top at 90.60 and the minimum target for this trade is 83.2. I suggest placing a short order at 89.70 or if you're going to be watching the markets when CPI figures are released wait for a spike high over-throw of the ED before taking a short position. Good luck!