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Short-Term Forex Technical Outlook: CAD/JPY (Update)

Wednesday, 19 November 2008 11:02:38 GMT  |  David Song, Currency Analyst

After peaking to a high of 103.50 in September, the CADJPY plunged to a low of 70.98 on 10/27, and may retest last month’s low over the week as risk sentiment continues to drive price action in the currency market.

Currency Pair: CAD/JPY
Chart: 60 Min Charts
Short-Term Bias: Bearish

Analysis Update

During the overnight session, the CADJPY continued to move along the 120SMA to hold above 77.90 (21.4% Fib level). The lack of momentum to push lower suggests that the pair may hold its currency level for the remainder of the trading session, but the lack of risk appetite among investors continues to favor a bullish outlook for the Japanese yen. Over the week, I anticipate the pair to break below the 21.4% Fib level to test last week’s low of 76.17 before working its way down towards the October lows. However, the fundamental event risks scheduled for the next 24 hours may call for a change in our outlook.

Analysis

After peaking to a high of 103.50 in September, the CADJPY plunged to a low of 70.98 on 10/27, and may retest last month’s low over the week as risk sentiment continues to drive price action in the currency market. At the beginning of the month, we saw the pair find short-term resistance near 87.22 (50.0% Fib level), and has pared its gains over the past two weeks. The lack of momentum to push higher continues to favor a bearish outlook for the pair, and I expect the pair to move lower over the near-term. The sharp decline in the 120 SMA could drag the below the 21.4% Fib level over the next few hours, and we may see the pair continue to push lower over the week. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.

To contact the author of this article, please email: dsong@fxcm.com

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