CADJPY has been underperforming in the past few days, breaking back below the 20-period simple moving average (SMA).
On the daily chart, prices rebounded off the 74.80 support level on May 7 but based on the RSI, momentum is too weak to provide a sustained move higher. However, the stochastic oscillator is creating a bullish cross within its %K and %D lines in the oversold zone, suggesting the end of the negative movement.
If price action returns above the 20-day SMA, there is scope to test the red Tenkan-sen line at 79.95. Clearing this key level would see additional gains towards the 81.27 – 82.20 resistance zone taken from the latest high and the inside swing low from February 7.
On the other hand, if 77.80 support fails, then the focus would shift to the 40-period SMA at 77.42, which if breached, would increase downside pressure and challenge the 76.50 barrier and the lower surface of the Ichimoku cloud at 76.12. From here, CADJPY would be on the path towards the 75.50 support.
Overall, CADJPY has been neutral since peaking at 81.27. Near-term weakness is expected to remain as long as price action takes place below the 20-day SMA.
