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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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I don’t discuss CADJPY very often. As yen crosses go, the pair tends to be a bit more volatile and choppy than others which can be problematic.
However, CADJPY has its moments. A look back at the last few months of price action shows a well-structured ascending channel. The lower portion connects with the March 19 and June 25 lows while resistance includes the May 22 and October 1 highs.
For those who have studied the weekly chart, you’ve no doubt seen what appears to be a head and shoulders pattern with the left shoulder starting in December 2017.
Personally, I’m not going to approach this as a head and shoulders simply because it developed at a swing low. That becomes evident when you factor in the downtrend between December 2014 and November 2016.
Still, the ascending channel you see below could present an opportunity for those with a more bearish outlook for CADJPY. The short-term uptrend will remain intact while above channel support, but a close below it would open up downside targets.
The most obvious target for shorts is the multi-year level at 80.50. In fact, that will most likely become my target if sellers force a daily close (using a New York close chart) below ascending channel support.
That said, don’t forget about other horizontal levels such as 83.90 and 82.30. Judging by the price action going back to March of last year, both areas are likely to attract attention.
As I mentioned above, CADJPY is still within a short-term uptrend. It’s important to keep that in mind as we could continue to see bouts of strength while above channel support. But with 400 pips to work with below support, this is one to keep an eye on moving forward.
Lastly, if you share my relatively bearish view of crude oil, then a CADJPY bearish bias starts to make a lot of sense. Of course, oil bears need to clear a channel of their own, but they’re well on their way. See this post for more.
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