This analysis is for traders who do not care much about the instrument they’re trading on. Many market participants believe that technical setups work on any instrument and they go beyond the major pairs, gold, and oil. This analysis is about CADJPY, where we see a classic sell signal.
The pair has been in a healthy uptrend since March and the price movements created an upward channel formation. The beginning of December brought us a breakout of the lower line of this pattern (blue). In addition to this dynamic support, the price also broke the horizontal one (green), which was made from the monthly lows from October and November. The price has been advancing slightly higher since the 6th of December, which can be considered as typical price action movement aiming to test the broken supports as the closest resistances. On Friday, the test ended with a nice bounce, which may be perceived as a bearish factor. I would be more cautious here and I would wait for the breakout of the black line first. That is a dynamic support of the mid-term correction and the breakout of that line should bring us a proper sell signal.
As for the target, the first one is on the orange line, which represents the lows from August and September. We should get there relatively easy if we do see a drop. If the price breaks the orange line it could spell real trouble for buyers, but currently, this is still up in the air.
Source: CADJPY: one support left