CAD/JPY Reversal Approaching Initial Support - Bearish Sub-86.53
- CADJPY reversal eyes initial support into 83.35
- Broader outlook remains bearish sub-86.53
- Updated targets & invalidation levels
Chart Created Using FXCM Marketscope 2.0
Technical Outlook: CADJPY reversed off a BIG resistance range last week at 87.36/43 with the decline now coming into initial support at 83.35/55. This region is defined by the 50% retracement of the February advance, the lower median-line parallel extending off the February low and a descending parallel extending off the February high. The immediate short-bias is at risk heading into this region with today’s close of added importance.
Ultimately we would be looking to sell a rebound while below key resistance & broader bearish invalidation at the 2016 high-day close / April open at 86.53. A break lower targets the 61.8% retracement at 82.39 backed by the median-line / 81.19. Critical support rests at the confluence of the January & February low-day closes at 80.61/63.
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Notes: The pair has been trading within the confines of a descending channel formation off the high, further highlighting initial resistance at 84.32. A breach above this level would be needed to mark a more significant recovery in the pair targeting 84.78 & 85.51- a region where we would once again be on the lookout for short-triggers.
A break below key near-term support at 83.35 keeps the short-bias in play targeting the 82.39, 81.58 and 81.19. A quarter of the daily average true range (ATR) yields profit targets of 30-33 pips per scalp. Added caution is warranted heading into Friday’s Canadian employment report with the release likely to fuel intraday volatility in the CAD crosses. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount!
Check out SSI to see how retail crowds are positioned as well as open interest heading into April trade.
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---Written by Michael Boutros, Currency Strategist with DailyFX
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