With weaker oil, soft manufacturing data for Canada and inflows to JPY with Euro uncertainties then CADJPY is an ideal shorting candidate.
The Canadian Dollar had a temporary reprieve form 6yr lows following a rebound in Oil. This rebound is now under question as Oil erased gain yesterday which also weighed down the Canadian Dollar across the board, with further selling coming from soft Ivey PMI data.
Technically CADJPY may offer a decent opportunity to get short with several areas of resistance to consider fading into. The 96.0 high respected the bearish trendline form the Dec ’14 high and may also form the ‘Head’ of an H&S top formation. Price currently resist above 93-93.20 support which raises potential for a retracement (and ‘RS’ to form).
If we get the rebound then this may provide an opportunity to fade into the rally and achieve a tighter reward / risk ratio to target 90.67.
A break above 94.30-60 would break the bearish trendline and above the 38.2% retracement to open up a run towards 95.50 and invalidates the H&S.
An alternative approach is to wait for a break below 93.20 as this would assume a bearish continuation by breaking the blue bullish support line.