CAD-JPY Remains Trendless

By: Mike Kulej

The CAD-JPY spent better part of the year moving down. After reaching a high of 98.47, this pair dropped all the way to 78.41 in August. That was a good size swing down. Under most circumstances, a respectively large correction could be expected, but, to date, we are yet to witness one.

In fact, the CAD-JPY has not made another low since August either. The price has been drifting sideways in a channel contained roughly between 84.00 and 78.50. This market is trendless and will remain so until a convincing move outside the channel takes place.

Just how trendless is the CAD-JPY? The ADX indicator, a trend validation tool, shows a reading of around 10. The lower the reading, the weaker the trend and current value is the lowest in years. A breakout outside the channel must be accompanied by an upturn in ADX in order to confirm the possible new trend.

For now, the Stochastic indicator may be the most useful tool. As long as the price stays between 84.00 and 78.50, it should correctly show turning points. Of course, the CAD-JPY will eventually develop new trend, but it still could be weeks before that happens.