CAD/JPY bounces off support

Earlier, we reported that the EUR/JPY could make a comeback thanks to the ongoing rally in stock markets, boosting the appeal of XXX/JPY pairs. Another potential reversal may already have taken place in the CAD/JPY, ahead of Canadian CPI data tomorrow.

The CAD/JPY has been printing bullish price action ever since the head and shoulders reversal pattern failed towards the end of March and the bears were trapped.

Today it bounced off its bullish trend line and support around 83.50 after initially extending its losses for two consecutive days earlier. Once again, the bears may have been trapped after it had formed a bearish-looking daily candle yesterday when the rally came to a halt near the 200-day moving average (84.33).

If I am reading this correctly, a rally above the 200-day SMA and previous high at 85.23 could be on the cards soon, with the next potential resistance seen around 85.60ish. However if the short-term bullish trend around 83.50 breaks first then all bets may be off.

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