CAD/JPY 4H chart 2/18/2013 7:45AM EST
Descending Triangle: CAD/JPY has been consolidating in February, and the 4H chart shows that its turned into a descending triangle with flat support in the 91.80-92 area, and falling resistance, the latest one at about 93.50. Above 93.50, the focus is back on the 94.50, a break above which will truly show a break from consolidation. A slide below 91.80 however can signal bearish correction.
Bullish trend: Price action, the rising 200-SMA and the fact price is trading above it should be clues that the market has been bullish heading into the triangle. It has been in a very sharp bullish swing since November 2012 as seen in the daily chart. There is an extended bearish divergence in the daily chart, but this can be resolved by sideways consolidation and not always result in a bearish correction. Let’s see if CAD/JPY can hold above 91.80 and push above 93.50 as this would be an early sign of bullish continuation.
Bullish continuation: the bullish continuation scenario opens up if CAD/JPY can clear 94.50. Using the width of the consolidation, about 250pips, the breakout projection would target 97.00.
CAD/JPY daily chart 2/18/2013 7:50AM EST