Canadian Dollar versus Japanese Yen has precisely followed the inverted head and shoulder pattern - formed on the daily chart and mentioned in most of our previous analysis that the pair will be gaining some strong grounds for bullish run towards higher breakouts. Even in our previously published analysis on 2nd Oct, we mentioned CADJPY was strongly bullish above exponential moving averages 50 and 200 in daily time frame along with 61.8% and 50% fibo retracement level, we only required a bullish closing above 88.30 which opened the gates towards 89.20 and 90.0 while currently the pair hovering at 90.80. The impulsively hawkish rally has driven the relative strength index in the daily and interday time frames into overbought conditions and the market requires to balance the scale now by taking an exit from this in terms of a bearish reversal. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

CADJPY has created strong support zones at 90.20 and 89.14 (which is currently acting as the weekly pivot), the market is expected to adapt to a bearish recovery by travelling towards the aforementioned support levels. The pair has reversed all the losses made since early 2018 and if breaks above the yearly high 91.10, - would emphasize that CADJPY will be providing us with a final touch down at all time intraday highs 91.50 and from that point we can expect a strong bearish reversal. At the moment from the current market structure - the relative strength index needs to adapt to a bearish reversal to take an exit from the overbought conditions. According to elliot wave pattern, we can be in the third wave on the daily chart (depends on 91.50 being broken) or in a state of formation of double top in the weekly time frame, only a strong reversal or further breakout would confirm where the pair will be heading next - specially expecting one last bullish wave to be formed.  

CADJPY

Oct 12 2021