CADJPY has been growing exponentially since the break above a three-year-old resistance trendline at the end of January, crawling above its simple moving averages (SMAs) in all timeframes and to the highest peak in more than two years.
In the daily chart, although the RSI and the Stochastics have yet to plot any downside reversal in the overbought territory, the price is within breathing distance of the key 87.00 level, which has been a tough restrictive region during the 2017-2018 period. Should the bulls overcome that bar, the next challenge will probably emerge around 87.82, presented by the 78.6% Fibonacci retracement of the 91.62 – 73.85 down leg.
If the bears take control, the price may seek support around 85.75 as it did earlier this week. Failing to rebound here may trigger another downside correction towards the 20-day SMA at 84.55, where any violation could ruin the steep uptrend in the short-term picture.
In brief, the short-term bias in CADJPY is still tilted to the upside, though with the pair approaching a key resistance zone and the momentum indicators providing a warning about strengthening overbought conditions, a downside reversal could be a likely outcome in the coming sessions.
