The CADJPY has been all over the place in recent months.
We had the 1,000-pip plunge in late February and early March, followed by the two and a half months of indecision.
CADJPY then broke higher on June 1st and went straight up for five days.
But the last four days have nearly erased all of June’s gains.
Notice that NZDUSD, which I commented on yesterday, also went parabolic starting on June 1st.
I’ve been saying it for the last week, but there’s something about these June moves that I don’t trust.
As for CADJPY, you have to take a step back and look at the monthly time frame to understand why I’m not buying into this move.
The monthly chart above shows an incredibly well-defined trend line that dates back to 1995.
Sellers broke that level in March.
Until I see a June close above that trend line near 78.50, I have to take this latest rally with a grain of salt.
In fact, I think there’s a good chance it’s a bull trap.
As I mentioned in yesterday’s NZDUSD post, the June closing price should be incredibly telling.
If we see CADJPY start to challenge 78.50 and close the day/week back below it, that will begin to confirm my thesis.
Alternatively, a June close above 78.50 would likely send CADJPY higher.
CADJPY just broke back inside of an ascending channel, so keep an eye on the upper boundary just above the 80.00 handle.
Key support comes in at 78.50, which is the 25 year trend line I pointed out above.
A daily and especially a weekly close below 78.50 would open the door to the bottom of the short-term channel near 76.00.