CADJPY remains stuck in a longer-term downtrend that leaves it vulnerable whenever the chart starts to tilt to the downside. The high last month came at a trend-line running down off the March high, this was met with a series of rejection candles. Again, a turn lower developing off the trend-line in the form of a lower high.
However, there was still a positive tone off the June low in place with a bottom-side parallel keeping CADJPY supported within an upward channel. After yesterday’s turnabout we are seeing the channel line come under fire in today’s session. A break after respecting significantly increases odds that another leg lower will develop soon.
Furthering along the case for shorts is the bear-flag/channel forming on the 4-hr time-frame. It is currently testing the under-side parallel. A break of the parallel and low at 8213 will open up a path towards lower levels. The lower parallel off the July high will need to be monitored, but a breach through there will likely steepen the sell-off.
Overall, the chart is leaning lower and if recent support breaks it may be time to prime up for another leg towards long-term support via a trend-line from late 2016 with stops potentially at just above 81 and 8060. If the recent low at 8213 holds, then so does a bearish bias with an alternative route possibly developing via a descending wedge.
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CADJPY Daily Chart (chart tilting lower)
CADJPY 4-hr Chart (flagging on lower parallel)
***Updates will be provided on these ideas and others in the trading/technical outlook webinars held at 9 GMT on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.
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---Written by Paul Robinson, Market Analyst
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