Time For The CADJPY's Trend Channel To Step Back In

[B]My picks:[/B] Long CADJPY
[B]Expertise:[/B] Combining Money Management with Fundamental and Technical Analysis
[B]Average Time Frame of Trades:[/B] 3 days - 1 week

The steady rise in risk that has guided the market through much of March and April has clearly met resistance. This sidelined trend would cut my NZDUSD position from last week short almost immediately. A cautious approach with a reduced-sized entry allowed for Monday’s rally to hit the first target I had drawn up Friday (equal to risk). However, the equally quick retracement through the end of that same session would stop the remaining portion of my trade at breakeven - and clearly canceling my plans to build a full-size position in an assured move above 0.60.

Looking across the commodity bloc this week, it would seem that the tempered pace of risk appetite has set most pairs to chop just before the market has tipped itself into renewed or reversed trends. However, one specific pair has maintained its activity level and has traversed its technical boundaries without regard to the congestion that has set in for its major counterparts. CADJPY has clear exposure to risk trends as the Canadian economy is considered to be fiscally and economically more stable than its Japanese compliment. As long as we don’t see a sharp rise in risk aversion, this pair will be comfortable in finding guidance from technicals. This pair has carved a rising trend channel for nearly four months; and the price action over the past week has seen the most recent downleg to traverse the entire width of the moving range. Now near the rising trendline that marks support (further supported by a pivot that goes back to November, the rising 50-day SMA and a nest of Fibs) around 80.50, there is the opportunity to be in for the next upswing. I will look to get in as close to support as possible with a stop that offers a significant buffer below 80 (depending on my entry). I will not sacrifice a wide and secure stop just because of notional risk. Instead, I will adjust my position size to keep its profile in line.