CADJPY has been plunging in the past three weeks, breaking below the 85.45 key level during the previous sessions. The aggressive sell-off drove the pair below the 20 and 40 simple moving averages in the daily timeframe, while the short-term indicators seem in confusion. It is worth mentioning that the pair recorded a fresh 8-month low of 83.82 last Thursday.
Turning our attention to the technical structure, the stochastic oscillator is creating a positive divergence with the price. The oscillator is moving higher at the same time where the price is moving lower, suggesting that a bullish correction is possible in the near-term. Moreover, the MACD oscillator is flattening in the negative territory, near its trigger line, signaling a neutral trend.
Further losses should see the June low of 83.20 acting as a major support. A drop below the aforementioned level would reinforce the bearish structure in the medium-term and open the way towards the next key support of 80.85.
In the event of an upside reversal, the 85.45 could act as a resistance barrier. A break above this level could shift the short-term outlook to neutral one as it could take the pair above the 20-day SMA. Further gains would lead the way towards the 86.70 level.
