By: Mike Kulej
The Canadian Dollar has been one the most dominant currencies during the last few weeks. While there were no massive rallies in its pairs, in most cases the CAD appreciated in a steady manner, as much as a few
hundred pips.
Late last week, particularly on Friday, the Canadian Dollar started to display signs of weakness. So far it is visible mainly on short-term charts, but there is little doubt that a sell off took place. The question is, will it continue?
Explaining the Chart
In case of the CAD-JPY, the upward price movement started to flatten last Wednesday, when it reached a high of 85.11. After that, the chart drifted sideways and made one more high at 85.17, before it dropped suddenly. That first minor low was established at 84.40, which was broken on Friday, suggesting further weakness.
Currently the price is testing the support of 84.10 and is very likely that this level will be breached. This short-term chart is displaying bearish characteristics – the 100 SMA and the Ichimoku cloud are above the price, while the indicators are confirming the down thrust. The CAD-JPY could bounce from the 84.10 support, but if it gives way, another 80-100 pips leg down is probable.