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Fan Yang

CAD/JPY in Bearish Continuation Price Action

The $CADJPY pair has been climbing in 2018 from a low just under 80.00 to a high just above 85.00. But in March, it started to retreat, and could be continuing a prevailing bearish trend that we say in Q4 of 2018. 

CAD/JPY Daily Chart

(click to enlarge)

Bearish Breakout:
- First of all, CAD/JPY started 2018 in a bearish swing, but then settled in a rising channel throughout the rest of the year. 
- Price eventually broke down the channel support by end of the year and continued lower. 
- Then, we saw small rising channel in 2019. This looks more like a flag pattern.
- The recent eventually break below this channel/flag can be seen as a bearish continuation signal. 
Other Bearish Signs:
- We also saw that price was unable to break through the cluster of 200-, 100-, and 50-day simple moving average (SMAs). 
- Furthermore, the RSI held under 60. 
- These are also signs that bears are still in charge. 
Bearish Outlook:
- With bears still in charge, I have a bearish assessment on CAD/JPY with downside towards at least 80.00.
- When we look at the weekly chart, we can say that we should limit the bearish outlook to the 72.00-77.00 area, where we can anticipate buying in this common support zone that goes back to late 2008/early 2009. 

A break above 85.00 however would put this bearish outlook on the shelf and make me reassess the CAD/JPY outlook.

CAD/JPY Weekly Chart

(click to enlarge)

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