Featured Trade CADJPY further potential downside after bearish flag breakdown

Short-term technical outlook on CAD/JPY (Fri 08 Mar)

Key elements

• The CAD/JPY cross pair has staged a breakdown below the medium-term “bearish flag” ascending range support that has held the rebound since the 03 Jan 2019 flash crash low of 76.61.
• The bearish breakdown has occurred on Wed, 06 Mar 2019 and the daily RSI oscillator continues to exhibit downside momentum and still has further room to manoeuvre to the downside before it reaches an extreme oversold level of 20.  In addition, the shorter-term hourly RSI oscillator has dipped into its oversold region but without any clear bullish divergence signal.
• The key short-term resistance stands at 83.05 which is defined by the minor descending trendline from 04 Mar 2019 high and the 23.6% Fibonacci retracement of the on-going decline from 01 Mar 2019 high of 85.23.
• The next significant near-term support rests at 81.95/80 which is defined by the 38.2% Fibonacci retracement of the recent rebound from 03 Jan 2019 low to 01 Mar 2019 high and the congestion area from 27 Dec 2018 to 23 Jan 2019.

Key Levels (1 to 3 days)

Intermediate resistance: 82.80

Pivot (key resistance): 83.05

Supports: 82.25 & 81.95/80

Next resistance: 84.00

Conclusion

If the 83.05 key short-term pivotal resistance is not surpassed, the CAD/JPY is likely to continue its potential impulsive down move to target the next supports at 82.25 and 81.95/80.

On the flipside, a clearance above 83.05 invalidates the direct drop scenario for a minor corrective bounce to retest the former “bearish flag” support now turns pull-back resistance at 84.00.