Technical Analysis – CADJPY loses ground below descending line

Melina Deltas, XM Investment Research Desk

CADJPY has been moving within the 61.8% Fibonacci retracement level of the downward wave from 89.25 to 76.60 near 84.40 and the 23.6% Fibo of 79.65 after the bounce off the two-year low of 76.60 on January 3. In the medium-term, the pair has been remained below a descending line, suggesting a somewhat bearish structure.  

Technically, the RSI is flattening near the neutral threshold of 50, while the MACD is edging lower below the trigger line.

A step lower could find support around the 40-simple moving averages (SMA) currently at 81.90 before touching the 38.2% Fibo of 81.42. In case of steeper declines could turn towards the 80.55 area.

An advance above the descending trend line and the 50.0% Fibonacci of 82.90 immediate resistance is coming from the 83.25 barrier. More bullish actions could be faced near the 61.8% Fibonacci region, which overlaps with the 84.40 resistance level, registered on April 17.

Concluding, a break above the 61.8% Fibo of 84.40 in the near term could change the bearish outlook to bullish. However, in case of a pullback below the 23.6% Fibonacci, this could confirm the long-term negative momentum.