Market News & Analysis

Top Story

Featured Trade: CAD/JPY further potential downside after bearish flag breakdown

Short-term technical outlook on CAD/JPY (Fri 08 Mar)



click to enlarge charts

Key elements

  • The CAD/JPY cross pair has staged a breakdown below the medium-term “bearish flag” ascending range support that has held the rebound since the 03 Jan 2019 flash crash low of 76.61.
  • The bearish breakdown has occurred on Wed, 06 Mar 2019 and the daily RSI oscillator continues to exhibit downside momentum and still has further room to manoeuvre to the downside before it reaches an extreme oversold level of 20.  In addition, the shorter-term hourly RSI oscillator has dipped into its oversold region but without any clear bullish divergence signal.
  • The key short-term resistance stands at 83.05 which is defined by the minor descending trendline from 04 Mar 2019 high and the 23.6% Fibonacci retracement of the on-going decline from 01 Mar 2019 high of 85.23.
  • The next significant near-term support rests at 81.95/80 which is defined by the 38.2% Fibonacci retracement of the recent rebound from 03 Jan 2019 low to 01 Mar 2019 high and the congestion area from 27 Dec 2018 to 23 Jan 2019.

Key Levels (1 to 3 days)

Intermediate resistance: 82.80

Pivot (key resistance): 83.05

Supports: 82.25 & 81.95/80

Next resistance: 84.00

Conclusion

If the 83.05 key short-term pivotal resistance is not surpassed, the CAD/JPY is likely to continue its potential impulsive down move to target the next supports at 82.25 and 81.95/80.

On the flipside, a clearance above 83.05 invalidates the direct drop scenario for a minor corrective bounce to retest the former “bearish flag” support now turns pull-back resistance at 84.00.

Charts are from eSignal




From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.