Short-term technical outlook on CAD/JPY (Tues, 10 Apr)
Key technical elements
- Since its low of 74.83 printed on 09 Nov 2016, the CAD/JPY has been evolving within medium-term complex range configuration. The recent rebound from the Mar 2018 low of 80.60 has stalled at a medium-term resistance of 85.75 which coincides with the former swing low area of 11 Aug 2017 before it gave way for a steep decline of 500 pips to print the Mar 2018 low of 80.60 (see daily chart).
- Since its 85.75 high of 13 Apr 2018, the CAD/JPY has started to evolve into a minor “Expanding Wedge” configuration with its upper limit/resistance at 85.10 and lower limit/support at 83.75/60 (see 1 hour chart).
- The aforementioned “Expanding Wedge” support also confluences with the ascending trendline from 19 Mar 2018 low and a Fibonacci cluster (38.2% Fibonacci retracement of the recent up move from 19 Mar low to 13 Apr 2018 high & the 1.00 Fibonacci projection of the down move from 13 Apr 2018 high to 21 Apr 2018 low projected from the 24 Apr 2018 minor swing high).
- The daily RSI oscillator has started to pull-back from a significant resistance level at the overbought region coupled with the shorter-term hourly Stochastic oscillator that has inched down from its extreme overbought level of 93% and still has room for further potential downside before it reaches its extreme oversold level of 8%. These observations suggest that short-term downside momentum of price action has resurfaced.
Key levels (1 to 3 days)
Pivot (key resistance): 85.10
Supports: 84.30 & 83.75/60
Next resistance: 85.75
Therefore as long as the 85.10 key short-term pivotal resistance is not surpassed, the CAD/JPY is likely to shape a further minor corrective decline within the “Expanding Wedge” configuration to retest the 84.30 minor swing low of 21 Apr 2018 before targeting the significant short-term support zone of 83.75/60.
On the other hand, a clearance above 85.10 invalidates the corrective decline scenario for a squeeze back up to retest the 85.75 medium-term resistance.
Charts are from eSignal
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