The CAD/JPY pair had a fairly quiet session on Thursday as lows the Yen-related pairs sat still. While the world assumes that the opposition will win the elections in Japan, it is also assumed that the public statements that have been made will carry over into the Bank of Japan. An inflation target of 3%, as well as a mandate to print "unlimited Yen” should put serious pressure on the Japanese currency going forward.
On the other side of this equation you have the Canadian dollar. The Canadians of course export oil and this pair is normally greatly influence by what's going on in the oil markets. This is mainly because the Japanese import 100% of their petroleum. (In fact, one of the biggest reasons for the expansion in the Pacific during World War II was precisely that reason.) Because of this, as oil rises in price this pair will typically rises well. Money flows from Japan to Canada in order to purchase petroleum.
Looking at this chart, you can see that there was once a consolidation area between the 79 and 81 handles. We now have broken out of that and matched the height of that pattern which is a basic tenet of technical analysis. In other words, you take the highs and simply project out and that would be your target. Then of course has ending of the 83 which is where we parked this pair last week.
Hammer
The hammer that was formed on Wednesday suggests that we will go higher. Simply put, if we can get above the 83.20 level I believe that this market will make another 200 pip run to the upside. The Japanese yen is currently week against most currencies, and has been taken a little bit of a breather over the last week or so. When you have a parabolic move like this, it's quite common to see either a massive pullback, or the market go sideways for a while in order for everyone to catch their breath. We don't have a pullback, so very likely were sitting still before the explosion higher.
