Despite hitting a new high, CADJPY remains within a consolidative range, signaling a lack of clear direction. The pair reached a high of 112.46, its highest level since the beginning of 2008, but has struggled to maintain momentum above 112.00. The upcoming Bank of Canada (BoC) rate decision at 13:45 GMT is expected to be a crucial event for the Canadian calendar and could potentially provide some clarity for CADJPY traders.
The 20-day simple moving average (SMA) has acted as a key support level for CADJPY, helping to keep the pair resilient above the 112.00 mark. Furthermore, technical indicators such as the Relative Strength Index (RSI) and the Stochastic Oscillator are also showing signs of positivity, hinting at a possible bullish breakout in the near future. If the bulls manage to push past the 112.00 resistance, the next levels to watch include 113.50-114.20 and potentially even higher towards 116.50 and 116.83.
However, bears could take control if CADJPY fails to sustain above the 20-day SMA and the support trendline at 110.45. A break below these levels could see the pair targeting the 200-day SMA at 108.88, with further downside potential towards the 108.00 territory. November’s low also serves as a critical support level, and a breach below that would worsen the short-term outlook for CADJPY traders.
CADJPY remains in a consolidative phase, with both upside and downside risks in play. Traders are advised to closely monitor key technical levels such as the 20-day SMA, support trendline, and resistance levels for potential trading opportunities. Additionally, the BoC rate decision could act as a catalyst for increased volatility and directionality in the pair, making it essential to stay vigilant and adapt to changing market conditions.