CADJPY has plunged over the last couple of hours erasing some gains of the previous days. The pair has been struggling in a trading range since April 10 with upper boundary the 85.75 resistance level and lower boundary the 84.30 support barrier. During yesterday’s trading session the price bounced off the upper level and posted significant losses.
From the technical point of view, the short-term momentum indicators dived sharply. The RSI indicator plunged below the 50 level and is approaching the 30 area, indicating further losses. Also, the MACD oscillator dropped below the red-trigger line but is still holding in the positive zone.
Downside moves are likely to find support at the 23.6% Fibonacci retracement level of 84.51 of the upleg from 80.53 to 85.75. Falling below this area would re-challenge the lower boundary of the consolidation area of 84.30. A successfully close below this region would shift the neutral outlook to bearish and drive the pair towards 38.2% Fibonacci level of 83.76.
In the event of an upside reversal, the upper band of 85.75 is acting as strong resistance level for the price. In case of a break above it, the pair could manage to hit the 86.75 critical barrier taken from the low of November 28.
