Hello traders! On November 4, CAD/JPY has reached and rejected the critical resistance level at 79.91, which has been formed thought the past two weeks. After that price went down sharply and broke below the uptrend trendline as well as the 200 Exponential Moving Average, suggesting bearish dominance.
Although after the breakout price pulled back and rejected the 88.6% Fibonacci retracement level at 79.76. This yet again shows taht the 79.76 – 79.90 resistance area is being defended by sellers.
Therefore, as long as the price remains below this resistance, CAD/JPY can be expected to remain under the selling pressure, which eventually might result in a price drop of 100 pips. This is because the nearest strong support is located at 78.35, which is confirmed by two Fibs. First is the 78.6% Fibs applied to the upside move which started early this month. The second is 161.8% Fibs applied to the corrective wave up after price broke below the EMA and the trendline.
At the same time, if downtrend will be the case, the price can also test the the88.6% Fibs at 78.14 and perhaps 78.00 psychological level will be of interest for buyers.
On the upside, only a break above 79.92 will completely invalidate the expected bearish outlook and the uptrend is likely to continue. This scenario suggests that price will rise towards the uptrend trendline, which might act as the resistance.
Bias: Strongly bearish while below 79.92
Potential Resistance Zone: 79.76 – 79.92
Potential Targets: 78.35, 78.15
Have a profitable trading!