CAD/JPY TECHNICAL OUTLOOK: BEARISH
- Canadian Dollar may be resuming 2-year downtrend vs. Japanese Yen
- Break of H2, 2019 rising channel floor appears to reassert bearish bias
- Near-term chart positioning hints extension downward may be imminent
The Canadian Dollar has been locked in a downtrend against the Japanese Yen since the start of 2018. The currency tested the bounds of the decline after bouncing from support capping losses since 2009 and recoiled lower, breaking through the floor of the rising channel defining the recovery. This paints the advance as corrective and suggests the dominant bearish bias has been reasserted.
CAD/JPY weekly chart created withTradingView
The move lower found initial support in the 81.62-83 zone and retraced a bit higher to prod the underside of former support in the 83.03-09 inflection region. Prices have since stalled, but the appearance of a bearish Dark Cloud Cover candlestick pattern on the daily chart suggests sellers may be readying to retake the initiative. Breaking below 81.62 may set the stage to challenge the 80.00 figure.
CAD/JPY daily chart created withTradingView
Zooming into the four-hour chart suggests bearish resumption may already be underway. Prices broke rising support underpinning the advance, settling in a narrow near-term consolidation range. Breaking below its floor at 82.62 may prove to be confirmation, opening the door for a slide below 82.00. Alternatively, reclaiming a foothold above 83.09 may be followed by a retest of the rising channel bottom near the 84.00 figure.
CAD/JPY 4-hour chart created withTradingView
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
