By: Mike Kulej
We keep hearing about the Canadian Dollar getting stronger, with the Bank of Canada constantly claiming that poses a threat to the domestic economy. The more accurate description is that the CAD is strong, but has not really made much progress recently.
In relation to the US Dollar, the Loonie oscillates within a narrow band around the parity level. Against the Japanese Yet, its advance also came to a halt, as is evident from this daily chart. The CAD-JPY is moving sideways with a bullish bias.
The price broke above the important support provided by previous highs, at 84.15, but failed to close above it and pulled back. On a positive note, the sell off was short lived and the CAD-JPY found support offered by a multitude of technical factors.
Perhaps the most obvious is the trendline, which is currently tested. Also, the Ichimoku Cloud (Kumo) serves the same function and the 100 SMA is not much lower. In addition, the most recent low is at 81.25, with yet another support level. This cluster of factors will make it difficult for the CAD-JPY to move sharply down, maintaining a positive bias. Emergence of a bullish candlestick pattern could mark a start of new rally in this pair.