The Canadian dollar versus the Japanese yen currency pair came back above and confirmed the solid support area of 81.38, and thus fueled the bullish optimism. The question is where will the bulls mark their profits?
Since the high of 85.23, the price has been in what can be called a descending trend, the latest low of which confirmed as support the 80.00 psychological level.
But the confirmation of 80.00 came after the break of the 81.38 important support area. This could have been seen as a first step in the process of the price extending even lower; because after the break of such an important support, one would expect the departure of the price from the respective level or a throw-back that confirms the ex-support (in this case 81.30) as resistance, favoring further decline. But none of the two happened, as the price rallied above the level, then printed the low of 80.56, followed by a consolidation at the area of 81.38.
Basically, a piercing of a very important support area was rendered as false, the consequence being an increased optimism state for the bullish side. And, as this optimism made a very nice appreciation, the moment in which the bulls will take a pause should be near. The 82.71 level is quite fit for such a purpose, as it is an intermediary level.
Because the entire trend cannot be considered as being very steep, the message is that the main profile is still bullish. This, considered along with the false break of a solid support area, concludes to the fact that, even after a minor pause, the bulls will be determined to extend at least until the 83.81 area. Only a false break of 83.81 would then give the bears reasons to push the price towards south.
The price is in an ascending channel, with very clear confirmations of the resistance and support lines — as highlighted by the rectangles.
Since the price already touched the resistance line of the channel and also confirmed 82.92, a correction phase — from the technical point of view — is to be expected. Such a correction may not be sustained by 82.43, but should be kept in check by the double support made possible by the lower line of the channel and the 81.77 level.
Only a valid break of the double support would point to the fact the ascending move ended.
Levels to keep an eye on:
D1: 82.71 83.81
H4: 81.77 82.94
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