Our report of 22nd January highlighted a Bearish Head & Shoulders pattern that targeted 82.00. That point was reached during March and extended by almost 1 1/2 big figures before profit taking developed.
That rebound regained virtually exactly half of the decline from January’s high but also created what is now confirmed as a false positive break above the spot and RSI moving averages. The importance of that move’s failure to close above the lower band of the weekly Ichimoku Cloud has now been highlighted as last week’s decline in CADJPY took RSI below its moving average line. This negative cross confirmed a similar move in spot CADJPY 4 weeks previously and emphasises a renewal of the selling pressure that dominated the early part of this year.
So we look for the downside to develop during the coming weeks. 81.63 is the first objective for CADJPY with March’s 80.54 behind that then towards 78.67.
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