Today, CAD/JPY exited the short-term rising wedge pattern through the lower side of it, this way confirming the theory behind such formations, which tend to break to the downside. Also, the pair fell below last week’s low, at 87.50. If the rate continues to trade below it, we will stay bearish, at least with the near-term outlook.
A further push south may bring the pair to the 200-day EMA, or the 86.75 hurdle, marked by the current lowest point of August. CAD/JPY may stall there for a bit, but if the sellers continue to show their strength, the pair could overcome the 86.75 obstacle and target the 85.42 level, which is the lowest point of July.
The RSI and the MACD are both pointing lower. In addition to that, the RSI is below 50 and the MACD is below zero, while resting fractionally above the trigger line. The two indicators show negative price momentum, which supports the idea discussed above.
Alternatively, to consider the upside, a push through the 88.46 barrier would be needed, as such a move would place the pair above the current highest point of August, this way confirming a forthcoming higher high. CAD/JPY might then travel to the 88.71 obstacle, or even to the 89.68 zone, marked by the inside swing low of July 5th. If the buying doesn’t stop there, the next possible target may be at 90.19, which is the highest point of July.
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