CADJPY is once again testing 83.80 resistance.
The area played a critical role as support between August and December of last year.
The Canadian dollar cross sold off from 83.80 earlier this month. However, buyers weren’t ready to fold.
You can see how this area is once again attracting sellers today’s session.
What’s different this time versus the retest on the 4th and 5th is today’s pending bearish engulfing range.
If today’s session does engulf yesterday’s, it could be a sign that CADJPY is ready to roll over.
The alternative to that scenario is a push higher toward former channel support near 84.50.
I mentioned this pattern on December 18th.
When you add the January 3rd flash crash, that breakdown was good for nearly 700 pips.
As long as CADJPY remains below 84.50 on a daily closing basis, the pair is vulnerable. That’s especially true if today closes as a bearish engulfing range.
The “daily closing basis” refers to the New York 5 pm EST close. These charts are required for trading price action.
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Key support comes in at 81.90, 80.55 and 78.70. Keep in mind that we could see a few bids crop up near 82.90 as well.
On the flip side, a move above 83.80 resistance would have us watching for a short opportunity near 84.50.
Either way, I favor CADJPY shorts while below 84.50.
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