The CADJPY rising wedge has been forming since the August 24th session low at 87.33 and is nicely defined. If you have followed me for any length of time, you have undoubtedly seen this pattern featured several times over the last few weeks.
However, I felt the need to comment on yesterday’s session as it was the pair’s first time back to former wedge support as new resistance. While the pair did manage to rally for nearly 100 pips, it fell short of closing back above the key level.
Note that in the recent weekend commentary I stated, “my bearish bias will remain intact while below the three-month trend line on a daily closing basis“. So although the pair managed an intraday rally that broke the level, buyers failed to close the session at prices that would negate the bearish bias.
This highlights the idea that former support is indeed acting as new resistance. And while yesterday’s price action didn’t quite form a pin bar, the bearish rejection certainly hints at the idea that sellers are lurking above 92.20.
Looking lower, key support comes in at 89 along with the current 2015 low at 87.33. Keep in mind that Canada reports its GDP tomorrow at 8:30am EST, so do expect an increase in volatility for the pair around this time.