Technical Analysis – CADJPY’s grasp on positive picture slips through its fingers

Anthony Charalambous, XM Investment Research Desk

CADJPY is currently trading around the 76.36 level, that being the 23.6% Fibonacci retracement of the down leg from 84.73 to 73.78. The price action, although finding some footing from the 75.96 low for upside corrections, is capped by the mid-Bollinger band. That said, aiding the negative picture are the declining 50- and 100-day simple moving averages (SMAs) and the recent bearish crossover of the 200-day SMA by the 100-day one.

Furthermore, the short-term oscillators suggest negative momentum is picking up again. In the negative region, the MACD’s push above its red trigger line looks to be failing, while the RSI is fading below its neutral mark. Likewise, the stochastics are confirming a southward move as they head towards the oversold territory.

Clearly steering below the 75.96 level could send the price towards the lower Bollinger band located at the 74.36 support from June of 2012. If selling interest persists and conquers the recent multi-year low of 73.78, the 73.49 obstacle from November 2011 could challenge the bears’ efforts to dive towards the 72.14 barrier from October of 2011.

If buyers manage to push above the mid-Bollinger band, the 38.2% Fibo of 77.95 could be first to restrict the climb ahead of the key swing high of 78.46 and upper Bollinger band above. A more sustained effort would be needed to overcome the 50.0% Fibo of 79.25 and the inside swing lows of 79.81, fortified by the 50-day SMA overhead, at 79.95. Overrunning these and the 61.8% Fibo of 80.54 could shift the attention to the 81.28 to 81.56 area, encapsulating the 100- and 200-day SMAs.

Summarizing, the short-term bias remains bearish below the 78.46 barrier, and either a break above 78.46 or below 75.96 could reveal the near-term direction.