CAD/JPY traded higher on Monday, breaking above the upper end of a symmetrical triangle that had been containing the price action since January 24th. The rate traded briefly above the key barrier of 90.80, which provided decent resistance between January 28th and February 4th. However, it returned back below that line. In any case, as long as the rate is trading above the upper end of the triangle, we would consider the short-term picture to be positive.
Even if the current setback continues for a while more, we see decent chances for the bulls to regain charge from near the upper end of the triangle. If indeed this is the case and we do see a rebound, we would expect a test near the 91.20 barrier, which is slightly above the high of January 27th, and it is marked by the inside swing low of January 20th. If that barrier is broken, then we could see advances towards the 91.65 or 91.95 zones, marked by the highs of January 20th and 19th, respectively.
Turning our gaze to our short-term oscillators, we see that the RSI, although above 50, has turned down, while the MACD lies above both its zero and trigger lines, but shows signs of topping as well. Both indicators detect slowing upside speed, and support the view for some further retreat before the next leg north.
Now, in order to start examining the bearish case, we would like to see a clear dip below the round figure of 90.00. The rate will already be below the lower end of the pre-discussed triangle and the bears may initially get encouraged to push the action towards the low of January 24th, at 89.57. Slightly lower lies the 89.45 barrier, marked by the low of December 28th, the break of which could extend the fall towards the low of December 24th, at 89.10.
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