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CAD/JPY: downside continuation below 104.56

The CAD/JPY pair crashed in the last hours and now it is trading at 105.10. In the short term, it has rebounded after its massive drop, but the bias remains bearish, so more declines are expected.

Surprisingly or not, the JPY took the lead, even though the Japanese Flash Manufacturing PMI came in at 51.0 points below 51.3 expected and compared to 51.5 in the previous reporting period signaling a slowdown in expansion.

The Japanese Monetary Policy Meeting Minutes could ring high action on Wednesday. Also, the Canadian GDP will be released on Thursday and represents a high-impact event. The indicator is expected to report a 0.1% drop.

CAD/JPY Rebound Ended!

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CAD/JPY: downside continuation below 104.56

As you can see on the h1 chart, the currency pair registered an aggressive breakdown through the uptrend line signaling strong downside pressure and a potential larger drop. In the short term, it has tried to recover but it has failed to reach and retest the broken uptrend line or the downtrend line.

The downtrend line represents a dynamic resistance. CAD/JPY could extend its downside movement as long as it stays under this dynamic obstacle.

CAD/JPY Outlook!

The 104.56 former low represents a downside obstacle. A valid breakdown through this level activates more declines. This scenario brings potential short opportunities below 104.56.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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