CADJPY – Upside now the focus
17th November 2016
CADJPY has been in a clearly defined downtrend throughout 2016 (barring one false and short lived spike in April). That trend has been defined by the 13/21 week moving averages and the weekly Keltner channel.
But our indications are that this trend has ended and a new positive bias is developing.
RSI gave a positive cross through it’s moving average at the beginning of October but this was not confirmed by the spot price. This month’s price action justified that lack of confirmation by trading to yet lower levels – the most negative since June 2012.
But the sharp rejection of those CADJPY extremes took the market back to the key moving average area and, with this week’s price action through. Of course a weekly close is required to be sure of the new positive tone, and the some reaction to this week’s highs is likely before Friday’s CADJPY close (perhaps towards 79.66).
Nonetheless with other CADJPY indicators, Momentum and Stochastics, also backing up this bullish turn in sentiment we now favour the topside.
A move above 82.15 is the first focus for bulls with sentiment then exposed to 83.88 and 85.52. Only a close back below the spot moving averages would question this, although we’d still look for a similar move in RSI, Momentum and Stochastics before re-shorting CADJPY.
