Bulls in the CAD/JPY currency pair are seeking for a retest of old daily support.
On the hourly chart, critical resistance is being tested from bullish structure and support.
The dynamic rising trendline is supporting the CAD/JPY as it approaches a high liquidity level characterized by prior daily lows.
The playbook for targeting the prior support that is expected to be retested in the coming hours is depicted below.
Both of these daily charts demonstrated the liquidity area’s bullish tendency.
The chart below shows how the price returned to the liquidity zone before melting to the previous daily resistance level.
The same may be said of the identical market structure that bulls can use to find a trade opportunity.
Bulls can target the daily liquidity area near 90.00, with an entry protected by the bullish structure below the corrective lows, 89.403. For a 1:2 risk to reward high probability set-up, on a retest of the support structure, 89.59 accounting for a 2 pip spread, bulls can target the daily liquidity area near 90.00, with an entry protected by the bullish structure below the corrective lows, 89.403.
However, the market has already retested support on an hourly basis, raising the possibility that the horse has already bolted (but buying at resistance is never a favourable strategy).
With that said, a lower risk entry from the 10 EMA on a smaller time frame, such as the 15-min chart, and supposed support structure is also an option for those on raw spreads (or taken at market if factoring in the spread):
To preserve a 1:2 R/R in this scenario, the stop loss would need to be pushed higher, below the secondary structure./n
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