Is CAD/JPY Ready To Break?

By: Mike Kulej

Recent price action in the CAD/JPY pairs ran into a very strong resistance. The 9.000 level seems to be holding steady, in spite of multiple advances there. On June 21, just as it seemed that an upside breakout would succeed, an immediate reversal took place, putting in doubt any additional upside progress.
The price and the MACD indicator created a bearish divergence. As a matter of fact, this chart shows multiple, consecutive divergences. Most statistics devoted to the subject indicate that this type of divergence tends to be more reliable than a single MACD divergence.
Right now, the CAD/JPY moved under the 100 SMA, a bearish indication in itself, and MACD also crossed the zero line and entered into negative territory. The price is testing the latest support at 87.65. This is a very important test for this pair and breaking this level should mean a continuation of a down trend, perhaps to as low as 85.50.
The reversal into a bearish trend has not been confirmed yet. A reaction at the current support level of 87.65 is possible, but that would only make any following move below it even more convincing. Multiple resistance/support levels are more important and a break through such a well-defined point tends to go farther and at a faster pace.