Chart of the day CADJPY pull backed towards major support

Short-term technical outlook on CAD/JPY

Key technical elements

• The recent pull-back seen in the CAD/JPY cross pair from its 91.64 high of 15 September 2017 has reached a major support of 89.70.
• The major support of 89.70 is defined by a confluence of elements; the pull-back support of a long term “inverse head & shoulders” chart pattern bullish breakout, the lower boundary of a medium-term ascending channel in place since 07 June 2017 low and a 1.00 time Fibonacci projection of the recent decline from 15 September 2017 high to 26 September 2017 minor swing low projected from 27 September 2017 minor swing high (see daily & hourly charts).
• The shorter-term (hourly) RSI oscillator has flashed a bullish divergence signal at oversold region. This observation suggests the recent decline from 15 September 2017 high has lost downside momentum where a potential rebound in price action is likely to occur.

Key levels (1 to 3 days)

Intermediate support: 90.13

Pivot (key support): 89.70

Resistances: 90.57 & 91.60

Next support: 88.70

Conclusion

Therefore, as long as the 89.70 pivotal support holds and break above the 90.57 intermediate resistance (minor swing high area of 29 Sep 2017) is likely to see a potential recovery towards the 91.60 resistance in the first step.

However, failure to hold above 89.70 should invalidate the on-going medium-term uptrend in place since 07 June 2017 low to trigger a corrective down move towards the next support at 88.70 (minor swing low area of 08/09 Sep 2017 + 50% Fibonacci retracement of the up move from 11 Aug 2017 low to 15 Sep 2017 high).

Charts are from eSignal

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