Major resistance level on CADJPY almost met

Since the beginning of June, we have seen a strong upwards trend over a short period which has now met a strong resistance level that has been tested on multiple occasions back at the end of November and mid-April. This level was also seen previously as a support level back in August 2015.

The price is now currently trading around the 88.5 level which is roughly in the lower range of this resistance level which means that there could still be some possible movement to the upside.

The RSI reading is well above the standard 70 overbought reading closing in on the 80 level. The last time the market was this overbought took place mid-December 2016 which fell over 800 pips from high to low in the following 6 months.  

When technical traders trade these short of chart patterns, a stop loss can be placed just above the higher level of the resistance area allowing only a small amount of risk on the trade. With the upcoming interest rates decision on Wednesday, this level will be closely watched. The consensus currently confirms no raise above 0.5% but if this turns out to be incorrect, the market could move quickly higher.  

Happy trading

Alexander Flood

Technical Analyst

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