Technical Analysis – CADJPY remains positive despite pressure from sellers

Anthony Charalambous, XM Investment Research Desk

CADJPY is fading following attempts to close a session above the 84.34 resistance from April 2019. Despite the overwhelming positive sentiment – reflected in the upward slopes of the Ichimoku lines and the 20-, 50- and 100-day simple moving averages (SMAs) – the technical indicators suggest a slight weakening in the positive direction.

Technically, the MACD, in the positive zone, is flat above its red trigger line, while the RSI, in the bullish region has slightly subsided. Moreover, the Stochastics reflect a bearish tone with their crossover at the overbought level. That said, traders need to keep in mind the completed bullish cross of the 200-day SMA by the 100-day one backing further advances.

If sellers steer below the immediate 83.90 level, the 83.53 area (Tenkan-sen line and 20-day SMA) could deter the pair from reaching the tough support of 82.79, involving the fresh low, the 50-day SMA and the uptrend line drawn from August 2019. Diving past this, another congested region of obstacles within 82.13 to 81.28 could halt further declines.

Otherwise, if buyers close above the 84.34 high of April 2019, the push up could encounter downside pressure at 85.22, being the top in March 2019. Climbing higher, the 86.23 high from December 2018 may impede the bulls from stretching towards the 86.97 mark, near the 87.00 handle.

In brief, regardless of the recent weakness in the pair, the short- and medium-term bullish bias looks to be intact, with a close above 84.34 refueling the positive outlook.