The CADJPY, like other yen pairs, has been weighed down in recent months. Safe haven flows have sent the Japanese yen soaring, and I don’t expect that theme to change anytime soon.
However, that doesn’t mean we won’t see bouts of yen weakness. With the exception of the CHFJPY, all of the yen pairs have clawed back some of their losses over the last couple of weeks.
In the case of the CADJPY, the pair has carved an ascending channel on the 4-hour time frame. And seeing as how this pattern has formed on the back of a 1,100 pip slide, it appears to signal further losses ahead.
Now, that does not mean the pair will move lower from its current price. When trading any technical pattern, it’s imperative to wait for confirmation. For an ascending channel such as this, that means a close below channel support.
Of course, there’s also the option to look for an opportunity to sell on a retest of channel resistance. Just keep in mind that this pattern cannot be deemed “complete” until support gives way.
A close below support would expose the recent swing low at 80.55. A daily close (New York 5 pm EST) below that would have us targeting the next critical support at 79.30.
Alternatively, a close above channel resistance would negate the idea in the near-term. I would not entertain a long entry if that were to occur.