CADJPY bounced from an 8 ½-year low of 73.85 on Tuesday and expectations are for the positive momentum to resume in the short-term as the RSI prepares to exit the oversold area.
Practically, the pair should overcome nearby resistance around 72.20 to stage a more sustainable rally that could initially pause around 78.20 and then near the 79.00 mark. Slightly higher, the 79.78 barrier could also halt any attempt higher.
On the flip side, a retest of the 2016 lows of 75.40 and 74.80 is possible if the bulls fail to close comfortably above 72.20. Moving lower, the 8 ½-year low of 73.85 could come in defense once again, rejecting any losses towards the 2011 trough of 72.14.
Meanwhile in the long-term picture, the range-bound trading came to an end and the outlook turned negative following the slump below the 79.00 number.
Summarizing, CADJPY may extend recovery in the short-term if it manages to climb above 77.20, while in the bigger picture, the bearish outlook would fade above 79.00.
