CAD/JPY: Down, Down and Down?
What a week for the Yen! Following alongside AUD/JPY, CAD/JPY is also looking bearish.
On a monthly level, this pair was able to achieve highs of 85.242 before plummeting over 200 PIPs. Price could potentially engulf the body of February's price action.
Last week's candle closure was a key indication that our bullish rally from year start was coming to a halt as price formed a significant weekly lower-high and close as a doji. With this weeks price action well underway, a three pin pattern formation is presenting itself and this is significant as such formations on a higher time-frame can act as strong confirmation for high probability trade setups to look for.
From a daily perspective, it is clear to see the upside momentum (signified by higher-lows and higher-highs) experienced over the course of January and February. We were introduced to March by a strong shooting star which reversed precisely from 85.243, a significant lower-high from December. So in essence, this could be classified as a double top. Price fell to test our trendline for the third time and managed to break through. However, the downward closure hasn't been too convincing. Because of this, a retracement to the moving averages would be expected or possibly the 83.565 level for a deeper retracement before continuing to the downside. My initial downside targets would be 82.280, with the extended target of 81.300.