USDJPY on the verge of a major bullish reversal
October 4, 2016
Buy or sell?
October 5, 2016

Oil price is forming an upward sloping wedge pattern with multiple bearish divergence signals by the oscillators. Short-term support is at $48.20 and a four hour candle close below it will confirm the bearish reversal. Another reason that makes me confident of a price reversal from current levels is the strength in USDCAD.

oil

Once the wedge pattern support is broken I expect price to move lower towards the Ichimoku cloud support around the 46$ price level.

USDCAD has traditionally an inverse relationship with Oil. As oil price rises USDCAD falls. For the last few sessions we have seen a break in this correlation. However I still believe it is valid and the current strength in USDCAD will be followed by weakness in Oil prices at least for the short-term. However we should not ignore the larger triangle pattern in USDCAD which implies that a clear break above 1.3250-1.33 could signal a deeper correction for oil prices. This is another reason why I prefer short Oil at current levels.

usdcadThank you for taking the time to catch up on my thinking.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.