Back on October 29th, I discussed a pattern on CADJPY that could produce a 400-pip move.
At the time, the pair was trading at 85.80 or about 80 pips above today’s price.
The ascending channel from the year-to-date low at 80.50 is what caught my attention.
It outlined a short-term uptrend. But the implications from that channel were and still are quite bearish.
The reason for that has to do with the year-to-date high. CADJPY carved the current 2018 high at 91.58 in early January.
Now compare that to the most recent swing high in early October.
Buyers only managed to reach 89.20 before losing steam on October 4th.
In fact, CADJPY fell off a cliff between the 4th and 10th of October losing more than 300 pips in a few short days.
That means CADJPY has carved a lower high so far this year. And by the look of things, the bearish price action isn’t over.
In my opinion, sellers are just getting warmed up. The real opportunity will materialize following a daily close below channel support.
It’s what I mentioned on October 29th, and I stand by those comments.
Here’s what I wrote three weeks ago:
The ascending channel you see below could present an opportunity for those with a more bearish outlook for CADJPY. The short-term uptrend will remain intact while above channel support, but a close below it would open up downside targets.
As of this writing, channel support comes in at 84.70. We can already see how buyers stepped in earlier today.
But I’m not interested in buying CADJPY.
Instead, I’m going to wait to see if sellers can secure a daily close below that 84.70 area.
If they do, it will expose the August and September lows at 83.90. A daily close below that would take CADJPY to 82.30.
The final resting place following a break below channel support could be the year-to-date low at 80.50.
Keep in mind, however, that such a move will take weeks if not months to play out.
IMPORTANT: I use New York close charts so that each day closes at 5 pm EST.