CADJPY has finally returned to the upside after the rebound on the 84.25 support, completing a bearish correction of the short-term uptrend movement. Also, the price climbed above the 23.6% Fibonacci retracement level of the upleg from 82.15 to 85.73, around 84.88 over the last hours and holds above the 20- and 40-simple moving averages (SMAs) in the daily timeframe.
Momentum indicators in the daily chart though are currently supporting that positive momentum is likely to strengthen in the short-term. Specifically, the RSI lies above 50 and the MACD continues to distance itself above its red signal line and entered into the positive zone.
In case of an upward attempt, the price would likely meet resistance at the 85.20 barrier. A break above this would ease the downside pressure and push the pair further higher until the 85.73 hurdle. A potential upside rally would help turn the short-term bias to a more bullish one.
Immediate support is being provided by the 23.6% Fibonacci of 84.88, which stands near the 40-day SMA. However, should prices dip lower again, the next support would likely come from the 20-day SMA, near 84.67. A drop below this level would signal the start of a deeper bearish phase until the 38.2% Fibonacci region of 84.36.
Overall, both the short- and medium-term outlooks are currently looking neutral to bullish, though caution is warranted in the near-term as there are signs of a bullish extension.
