Hello traders! Yesterday CAD/JPY currency pair has reached and rejected the upper trendline of the extended descending channel. Along with it, the price has bounced off the81.43, which is 761.8% Fibs applied to the corrective wave down after the downtrend trendline breakout. This was a very clear rejection of the Fibonacci resistance, suggesting that bears are defending this level.
As long as the price remains below, correctional move down should be expected, which might result in a 200 pip price drop. This is because the critical support is located at 78.91, supported by 38.2% Fibs as can be seen on the chart. This price level previously acted as the support and is likely to remain a strong demand zone in the future, if the price will actually start moving south. Also, the 78.91 downside target corresponds to one of the downtrend trendline of the channel, suggesting that CAD/JPY could test it in just 4 trading days.
And finally, Fibonacci cycles show, that yesterday a new cycle has begun, which could be the bearish cycle as per this analysis. The end of this cycle and the beginning of the next one is on November 16, which also confirms a fast downside move.
Nonetheless, the continuation of the upside move might continue, but this is only if the price breaks above the recently printed high at 81.43. Only then, a bearish forecast will be invalidated and uptrend continuation is likely to take place.
Bias: Strongly bearish while below 81.44
Potential Resistance Zone: 81.00 – 81.40
Potential Targets: 78.92
Have a profitable trading!