CAD/JPY has surged in recent days along with the rally in risk sentiment and positive Canadian 3Q GDP report released earlier in the week. The Loonie may see a correction after recent gains as the November Canadian employment report this morning disappointed markets with an uptick in the unemployment rate to 7.4% from the prior 7.3% and another month of job losses with the net change coming in at -18.6K from the prior -54.0K (cons. +20.0K).
Technically, CAD/JPY faced significant long term resistance today with a test of the 100-day simple moving average, the 61.8% Fibonacci retracement of the decline from October highs to November lows, and a downward trending resistance line. The trend line dates back to the highs of 2011 which occurred in April that also sees a test with the highs of July and highs of October. CAD/JPY has, in the short-term, been rejected from the convergence of these levels and may be setting up for a deeper correction. The long term trend is bearish as evidenced by the lower highs and lower lows and as such we maintain a bearish bias. While the 77.10/30 area holds as resistance, we would anticipate a further decline in CAD/JPY is an initial move towards the 21 and 55-day SMA’s around the 75.50 zone. A sustained break above the 77.30 level would negate this view and offers roughly a 2-to-1 reward-to-risk ratio at current levels.
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Technical Update: CAD/JPY Testing Long Term Trend Line
Published 12/02/2011, 12:40 PM
Updated 05/18/2020, 08:00 AM
Technical Update: CAD/JPY Testing Long Term Trend Line
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