CADJPY Advances To Fresh Highs Within Overbought Area

Technical analysis of Forex market

CADJPY had its best week since early August, appreciating by 1.5% to an almost one-month high of 80.44.

In the four-hour chart, the pair rallied beyond its 200-period simple moving average (SMA), while the 20-period SMA has further reduced its negative gap with that line, adding more shine to the ongoing uptrend.

The momentum indicators are also backing a positive short-term bias as the RSI and the Stochastics have yet to leave the overbought area. However, they have somewhat stabilized, suggesting that room for improvement might be limited.

– advertisement –

If the pair sustains strength above the 61.8% Fibonacci of the 81.56-78.35 downtrend, at 80.30, the 78.6% Fibonacci of 80.88 could next show up on the radar. Should the bulls claim that barrier too, the way would open towards the key 81.45 resistance region.

On the other hand, a downside reversal may seek support near the 200-period SMA at 80.00 and if this fails to act accordingly, the swing high of 79.75 should provide footing to keep the upward pattern active. Otherwise, the outlook will turn neural, and the focus will turn to the 50-period SMA currently at 79.50. Lower, the supportive region around 79.00 could be a tougher obstacle.

Summarizing, CADJPY has strengthened its short-term bullish profile, which is expected to stay in place in the short–term unless the price crosses below 79.75.