CADJPY Posts Red Days; Broader Outlook is Bullish

CADJPY has come under renewed selling pressure, falling back below its 20-day simple moving average (SMA). Despite the latest pullback though, the pair has not posted a fresh lower low, which makes one hesitant to trust further declines for now.

Looking at momentum oscillators on the daily chart though, they suggest further declines may be on the cards in the short-term. The RSI is approaching its neutral 50 line, detecting negative momentum, and is also pointing downwards. The MACD, already negative, lies below its trigger line.

More decreases could find immediate support at the 86.10 level, which overlaps with the 40-period SMA, ahead of the 23.6% Fibonacci retracement level of the up leg from 77.90 to 88.30 at 85.85. Underneath this hurdle, the 85.10 barrier and the 38.2% Fibonacci could be the next highlights.

On the flipside, if the bulls retake control, price advances may stall initially near the latest highs at the 31-month peak of 88.30. A potential upside violation of this level would also coincide with a continuation of the uptrend hitting the next resistance at 89.25, taken from the high in September 2018.

To sum up, CADJPY has been in a positive tendency over the last year, while the recent negative days may indicate a downside correction in the short-term.