CAD/JPY Daily Chart 11/15/2012 9:00AM EDT
Bullish breakout, momentum: The CAD/JPY has had a very strong couple of weeks going from a recent consolidation range low around 78.77 to a break of that consolidation range (seen in the daily chart) as well as a key falling trendline (seen in the weekly chart). The RSI in the daily chart has tagged 70 and held above 40, reflecting persistent bullish momentum development.
Breakout target: The weekly chart also shows the RSI tag 70, hold above 40 this year, and now pushing back above 60. Indeed bullish momentum is building. As CAD/JPY crosses the 200-week SMA as well, it is now exposed to the 2012 high near 85.00. When a trendline is broken, we can sometimes look at its origin as a possible target. If that is the case, the long-term target would be 94.46, the 2010-high. That’s a long way’s to go, so let’s first focus on the 2012-high.
If there is a throwback, the previous consolidation resistance area should be seen as support around 81.40. I would not be surprised of even sharper corrections, but I think it should hold above 80.50 and the 200-day SMA. Below that, we are likely done with a false break out, which refocuses the CAD/JPY to the 78.70-80 consolidation support, and lower.
CAD/JPY Weekly Chart 11/26/2012 9:10AM EDT
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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