Swiss Franc and Canadian Dollar vs Japanese Yen Technical Forecast
Weaker Bearish Momentum
On Thursday, CHF/JPY declined to an over four month low at 109.17. However, the price rallied after and settled above the 110.00 handle. On the following day, the weekly candlestick closed in the green with a 0.7% gain.
On the other hand, CAD/JPY rallied on Thursday to an over two week high at 77.25 then declined after. On Friday, the pair closed the weekly candlestick in the red with nearly 0.5% loss.
Alongside that, the Relative Strength Index (RSI) remained below 50 on both pairs, indicating that bearish momentum was still intact.
CHF/JPY Daily PRice CHART (JuLy 1, 2018 – May 5, 2020) Zoomed Out
CHF/JPY Daily Price CHART (Jan 26 – May 5 , 2020) Zoomed in
Based on analysis of the daily chart, on March 31 CHF/JPY broke below the uptrend line originated from the March 9 low at 109.58. Last month, the price failed on multiple occasions to overtake the 50-day moving average, indicating that bears were still in charge. On April 13, the pair fell and stuck in the current trading zone 10.7.76- 111.68.
A close below the low end of the zone could embolden bears to press towards 103.93. A further close below that level could send CHFJPY towards 101.87. In that’s scenario, the weekly support levels underscored on the chart (zoomed in) should be watched closely.
In turn, a close above the high end of the zone would mean a weaker bearish sentiment. This may trigger a rally towards 114.38. A further close above that level could extend this rally towards 116.43. Although, the weekly resistance levels printed on the chart would be worth monitoring.
CAD/JPY Daily PRice CHART (June 15, 2018 – May 5, 2020) Zoomed Out
CAD/JPY Daily PRice CHART (March 21 – May 5, 2020) Zoomed In
Looking at the daily chart, on March 18 CAD/JPY tumbled to its lowest level in nearly eight and a half years at 73.81, then paused its downtrend and developed a symmetrical triangle.
On Thursday, the price rebounded from the high end of the current trading zone 74.62 – 77.25 and reversed lower. Yesterday, the pair broke below the lower line of the aforementioned triangle and generated a bearish signal.
A close below the low end of the zone may encourage bears to press towards 72.14. A further close below that level could send CADJPY even lower towards 68.39. that said, the weekly support levels underlined on the chart (zoomed in) should be considered.
On the flip side, any failure in closing below the low end of the zone may push the price for a re-test of the high end of the zone. A further close above that level could extend the rally towards 78.68. Nevertheless, the weekly resistance levels marked on the chart should be kept in focus.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
