On Friday we looked at an ascending channel that had formed on the CADJPY 4-hour chart. At the time the pair was trading about 70 pips below a confluence of resistance at 88.20.
The idea was to watch for a sell signal from 88.20 this week. However, buyers have so far failed to deliver. And given the flight to safety we’ve seen over the past 12 hours, it appears sellers are back in the driver’s seat for now.
If you recall from Friday’s post, I mentioned that the bigger play here, in my opinion, is a close below support near 86.85. Such a close would expose the August low at 85.50 followed by the next key support at 84.50/75.
If we look at today’s price action, we can see bids forming in the 86.85 area. This is a clear sign that the level I outlined last week is of some importance. Whether or not it produces a sell signal over the coming sessions remains unclear.
I have modified the upper level of last week’s channel due to the price action between August 25th and the 28th. It seems this is more likely a rising wedge than it is an ascending channel.
I’m going to stand aside for now and wait to see if sellers manage a 4-hour close below support at 86.85. If they do, I will begin watching for a sell signal on a retest of the area as new resistance.
As mentioned above, a break below wedge support would target the August low at 85.50 followed by 84.50/75. Alternatively, a push higher from current levels would target the confluence of resistance at 88.20.
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