CADJPY breaks below 200-day moving average for the first time since August 10th
Canadian Dollar/Japanese Yen (CADJPY) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, CADJPY finished Wednesday at 79.64 losing 33 pips (-0.41%). Today's close at 79.64 marks the lowest recorded closing price since August 10th. Closing below Tuesday's low at 79.90, the market confirmed its breakout through the prior session low after trading up to 39 pips below it intraday.
Daily Candlestick Chart (CADJPY as at Sep 16, 2020):
Wednesday's trading range has been 50 pips (0.63%), that's below the last trading month's daily average range of 66 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CADJPY.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 79.29 (S1). The FX pair closed below the 200-day moving average at 79.78 for the first time since August 10th.
Crossing below the lower Bollinger Band for the first time since July 30th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 80.63 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on July 30th, CADJPY actually gained 1.17% on the following trading day.
Although CAD/JPY is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Further selling might move prices lower should the market test August's nearby low at 78.69.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 50" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for CAD/JPY. Out of 107 times, CADJPY closed higher 52.34% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 58.88% with an average market move of 0.14%.
With four out of the seven Major FX Pairs closing higher today, the ones that stand out on the positive side are GBPUSD gaining 0.61% and NZDUSD closing 0.27% higher. On the flipside the worst performers have been USDJPY closing -0.47% lower and EURUSD losing -0.25%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been GBPPLN surging 0.81% and ZARJPY closing 0.78% higher. The worst performers of the day have been EURZAR tanking -1.42% and CHFZAR closing -1.28% lower. Read more