Technical analysis
The CADJPY pair has formed negative price divergence on the Momentum indicator across the four-hour time frame during its recent recovery.
The four time frame continues to shows that the CADJPY pair is trading inside a large broadening descending wedge pattern. Seller may be preparing for another key technical test towards the bottom of the wedge.
What the possible outcomes are
In our most likely scenario, the CADJPY pair stages a final technical test back towards the bottom of mentioned descending broadening wedge pattern, and then starts to rally.
Alternatively, the CADJPY pair may rally towards the top of the broadening wedge pattern, around the 89.45 level, before staging a technical correction to the downside.
Key levels
Support 86.30 85.40
Resistance 88.00 89.45
