CADJPY is testing a massive trend line today that extends from the March 2020 COVID low.
We’ve seen several rallies from this level, including in January.
However, CADJPY is starting to weigh on the level this week, which may suggest an imminent breakdown.
That said, the trend line at 96.00 is still holding as support.
It will take a sustained break below that level to open up downside targets.
A “sustained break” is a series of higher time frame closes, which is especially important when dealing with a three-year level.
Before I discuss potential targets on a breakdown, I want to share the range that CADJPY has traded in since 2008.
Even the 2007 rally above 106.70 was a colossal fakeout.
But the massive 3,300-pip range is what we’ve seen from CADJPY for over a decade.
You can also see where the pair recently confirmed a bearish fakeout above the 106.70 range resistance in November.
That fakeout/deviation wasn’t nearly as significant as the one from 2007, but it suggests weakness nonetheless.
The range above also hints at a new downtrend for CADJPY, so an imminent break of trend line support makes all the more sense.
However, it’s still imperative to wait for a confirmed breakdown.
Downside targets for CADJPY following a higher time frame breakdown include the 92.00 area with a higher time frame break below that opening up 84.70.
Of course, the 94.60 January low will also likely attract buyers on the way down.
Lastly, and once again, remember that a sustained break below the March 2020 trend line is needed before any of these downside targets materialize.