By: Mike Kulej
Just like the other currencies, the Canadian Dollar has sold off considerably against the Japanese Yen lately. The CAD-JPY fell from 94.50 to 78.40 during the summer. Unlike the USD-JPY, though, it has not reached new low, and is currently testing an important support. On this weekly chart of the CAD-JPY, we can see the price bouncing off the 78.40 level, a support established earlier in the year.
The last two weekly candlesticks are, respectively, a hammer and a doji, both reversal patterns. Given the fact that they are formed on such a large time frame gives them an added importance. Chances are, that, at least for now, the bearish trend has may have run its course.
A more significant price correction could take place in near future. As always when using the candlestick patterns, it is best to wait for another bullish (white body) candlestick to confirm this reversal. If this does not happen, the downtrend will remain a prevailing force. Should the price break the 78.40 support, the CAD-JPY could drop to as low as 68.40, the low from January.
