CAD/JPY has remained quiet yesterday and today, staying slightly above the critical support barrier of 90.50, which also prevented the pair from drifting lower on Tuesday and on Oct. 12. Overall, the price structure has been of lower highs and lower lows since Oct. 21, as marked by a downside line, and thus, we would consider the short-term outlook to be cautiously negative.
A clear and decisive dip below 90.50 would confirm a forthcoming lower low and allow a test at the psychological round figure of 90.00. However, if the bears are unwilling to stop there, a break lower could pave the way towards the 89.25 or 88.85 zones, marked by the inside swing highs of Oct. 8 and 5, respectively. Another dip, below 88.85, could extend the fall towards the low of Oct. 6, at 88.00.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50, pointing down, while the MACD runs below both its zero and trigger lines. Both indicators detect intense downside speed and enhance the case for a break below 90.50 soon.
On the upside, we would like to see a break above 91.65, near Wednesday’s high, before we start examining whether the bulls have gained the upper hand. This could confirm the break above the aforementioned downside line and encourage advances towards the 92.50 area, which provided strong resistance between Oct. 22 and Nov. 1.
If the bulls do not stop there, we could see them aiming for the high of Oct. 21, at 93.00, the break of which could take the rate into territories last tested back in August 2015, with the next potential resistance zone being at 94.00, marked by the inside swing low of Aug. 20 of that year.
