CAD/JPY free-fall ended at the end of January 2015. Since then, the correction continued and the pair has been ranging between a low of 91.70 and a high of 96.79 for over two months. In mid-April, CAD/JPY broke above the established high of 96.79 with a big volume.
The uptrend line has been rejected over and over again, with the last time on May 7, where it bounced off the level of 98.48. In addition, the price broke above the ascending channel yet again adding more confidence to the already established uptrend. Looking for the Fibonacci plotted on the channel breakout point, after trading above the channel, the pair returned back to the breakout point – 50% Fibonacci (S1) where it formed a significant support level.
In the absence of fresh lows and evidence of the higher highs and higher lows, the growth is most likely to continue. Therefore, consider buying CAD/JPY around the current price targeting either R2 (101.00) or R3 (103.25). The different picture, that suggests a downside correction, should only be studied upon the breach of the S1 (98.48) support and/or daily close below 98.00, which is a psychological number.
Support: 98.48, 97.35, 95.96, 93.70
Resistance: 99.61, 101.00, 103.25
