The CADJPY fell below a critical area of support on Monday.
Buyers held their ground relatively well before the weekend.
However, Monday’s selling pressure proved to be too much for bulls to handle.
But let’s back up a little…
All of this began with the March 1st sell signal.
We had been watching for a retest of the 84.50 resistance area since February 25th.
That March 1st sell signal took CADJPY to our initial target area of 82.30.
The pair ended up bouncing at 82.40 so I was off by ten pips, but I can live with that.
Following a 160-pip rally that began on March 8th, CADJPY buyers hit a brick wall last week at 83.80.
I wrote about this level on March 14th.
Sure enough, sellers carved a bearish engulfing range on Friday which I pointed out over the weekend.
As you can see from the 4-hour chart below, CADJPY bears are following through on Friday’s sell signal, at least so far.
With the CADJPY now below this trend line, any retest of the 83.60/70 area will likely encounter an influx of selling pressure.
Monday’s breakdown also re-exposes that 82.40 support area.
A retest of 82.40 will likely attract a few bids, but CADJPY appears to be carving a lower high this month.
That’s a significant development as it means 82.40 may only provide temporary relief the next time around.
And if sellers clear 82.40 on a daily closing basis, the next stop is 80.55.
It’s difficult to see why I like 80.55 based on the recent price action, but a view of CADJPY since April 2017 illustrates why the level remains on my chart.
I will remain bearish CADJPY while below this (new) trend line resistance.
Key support comes in at 82.40 followed by 80.55.