CADJPY is being capped by the 20-day moving average (MA), having rebounded from Monday’s 7½-month low of 78.48. Prices are currently hovering around the 23.6% Fibonacci retracement of the July-August downleg at 79.60. But the next move could be in either direction as the momentum indicators are giving mixed signals.
The stochastic oscillator is pointing to ongoing positive momentum as both the %K and %D lines are rising, though looking at the RSI, downside risks are evident as it has flatlined in bearish territory.
Should the bulls prevail, the pair is expected to meet stiff resistance at the 61.8% Fibonacci of the January-March upleg at 79.94, near the 20-day MA. Clearing this hurdle would shift the short-term bias to positive and could see CADJPY making a run for the 50% Fibonacci at 80.95. However, without a recovery above the 50-day MA around 81.43, there’s unlikely to be any easing in the medium-term bearish structure.
On the other hand, if prices continue to slip, the pair could retest the 7½-month trough of 78.48. Breaking this support would reinforce the bearish outlook and the bears would next target the 78 handle before eyeing the low of 76.68 from the January flash crash.
