CADJPY is in a flying mode today as it surges above the 50-day simple moving average and the 23.6% Fibonacci retracement level of the up leg from 78.48 to 84.55 near 83.11, stretching its upward pattern towards a one-month high. According to the RSI, positive momentum could push for further gains in the short-term as the indicator picks up steam above its 50 level. The stochastic is also advancing, though, it is relatively close to the overbought threshold; negative corrections cannot be excluded should it move above 80.
In the positive scenario, where the price continues to expand above today’s high of 83.78, a new top could be formed around the eleven-month high of 84.55. If the market manages to overcome that area, traders could look for resistance at the 85.20 level before steeper bullish actions take the price up to the upper bound of the channel.
A reversal to the downside could stall at the immediate 23.6% Fibo of 83.11 and the 50-day SMA. Further below, the 20-day SMA currently at 82.70 could also provide support before flirting with the 38.2% Fibo of 82.24. Any violation at this point could potentially trigger further sell-off in the market, probably leading the price down to the 50.0% Fibo of 81.50.
To sum up, the short-term bias is bullish, with the medium-term outlook also being positive.
