Technical Analysis – CADJPY plunges but stochastic indicates bullish correction
February 27, 2018 2:26 pm
CADJPY has been plunging in the past three weeks, breaking below the 85.45 key level during the previous sessions. The aggressive sell-off drove the pair below the 20 and 40 simple moving averages in the daily timeframe, while the short-term indicators seem in confusion. It is worth mentioning that the pair recorded a fresh 8-month low of 83.82 last Thursday.
Turning our attention to the technical structure, the stochastic oscillator is creating a positive divergence with the price. The oscillator is moving higher at the same time where the price is moving lower, suggesting that a bullish correction is possible in the near-term. Moreover, the MACD oscillator is flattening in the negative territory, near its trigger line, signaling a neutral trend.
Further losses should see the June low of 83.20 acting as a major support. A drop below the aforementioned level would reinforce the bearish structure in the medium-term and open the way towards the next key support of 80.85.
In the event of an upside reversal, the 85.45 could act as a resistance barrier. A break above this level could shift the short-term outlook to neutral one as it could take the pair above the 20-day SMA. Further gains would lead the way towards the 86.70 level.
CADJPY has been plunging in the past three weeks, breaking below the 85.45 key level during the previous sessions. The aggressive sell-off drove the pair below the 20 and 40 simple moving averages in the daily timeframe, while the short-term indicators seem in confusion. It is worth mentioning that the pair recorded a fresh 8-month low of 83.82 last Thursday.
Turning our attention to the technical structure, the stochastic oscillator is creating a positive divergence with the price. The oscillator is moving higher at the same time where the price is moving lower, suggesting that a bullish correction is possible in the near-term. Moreover, the MACD oscillator is flattening in the negative territory, near its trigger line, signaling a neutral trend.
Further losses should see the June low of 83.20 acting as a major support. A drop below the aforementioned level would reinforce the bearish structure in the medium-term and open the way towards the next key support of 80.85.
In the event of an upside reversal, the 85.45 could act as a resistance barrier. A break above this level could shift the short-term outlook to neutral one as it could take the pair above the 20-day SMA. Further gains would lead the way towards the 86.70 level.
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