CAD/JPY just broke its short-term uptrend!
Does this mean that the pair is about to see a reversal?
Take a look at the 15-minute chart and tell me what you think!
CAD/JPY 15-minute Forex Chart by TV
I don’t know if you’ve noticed but CAD/JPY has been making higher highs and higher lows since last week after the pair bounced from the 105.80 zone.
This week, the pair’s upswing was supported by a trend line and 100 and 200 simple moving average lines.
Not anymore!
Not only has CAD/JPY broken below its trend line support, but it’s also now trading below the 100 and 200 SMAs. And that’s after the SMAs saw a bearish crossover!
Is CAD/JPY ready for a proper short-term bearish reversal?
We know from yesterday’s Canadian CPI release that the Bank of Canada (BOC) has more room to tighten its policies further.
Unfortunately for CAD and other “risky” assets, concerns over China’s growth and demand are putting a lid on the gains of crude oil and other commodity-related currencies.
On the other side of the CAD/JPY pair, speculations of “YENterventions” could continue to drag yen crosses lower or at least limit their gains as long as USD/JPY remains near the 145.00 closely-watched levels.
Speaking of closely-watched, the FOMC meeting minutes is up later today.
If the markets focus on the Fed’s plans to tighten its policies further or keep it tight for a longer period of time, then we may see risk aversion that could drag comdolls like CAD lower.
CAD/JPY could test yesterday’s lows near 107.65 or visit potential inflection points like the S1 (107.50) or S2 (107.29) Pivot Point levels.
Of course, I wouldn’t rule out a possible revisit to the broken support zone near the Pivot Point and SMA lines before CAD/JPY sees sustained bearish pressure.
If traders choose to price in the end of the Fed’s rate hike cycle, however, then CAD/JPY could go back above the trend line and extend its short-term uptrend.
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