The CADJPY decline has reached a level that was previously mentioned on July 15th after the Bank of Canada cut the benchmark interest rate from 0.75% to 0.50%.
Since the time of that writing the pair is down 120 pips and looks ready to extend losses by another 150 pips. However before that idea can be considered plausible the bears need to overcome the 94.50 key support level.
This area has been a major factor for CADJPY, acting as support on several occasions between February and April and more recently acting as support on July 8th and 9th. Yesterday’s session tested the level for the fourth time this month but was unable to close the day lower.
From here traders can watch for a daily close below 94.50 to either initiate a new short position or add to an existing one. I remain short from the July 1st bearish pin bar at 98.00 with a target of 93.00.
Summary: Wait for a daily close below 94.50 and then watch for a selling opportunity on a retest of the level as new resistance. Key support comes in at 93.00.