The CAD/JPY pair crashed in the last hours and now is located at 109.01 at the time of writing, far below today's high of 109.50. After its amazing growth, a downside movement is natural. Still, despite temporary drops, the bias remains bullish. Only a major downside reversal should announce a larger downside movement.
The price action developed a Rising Wedge pattern, but the formation is far from being confirmed. Fundamentally, the CAD dropped ahead of the Canadian inflation data as the CPI and Core CPI indicators were expected to report lower inflation compared to the previous reporting period. The Consumer Price Index registered a 0.4% growth matching expectations, while Core CPI rose by 0.4% compared to the 0.5% growth in the previous reporting period.
CAD/JPY Challenges Dynamic Support!
The CAD/JPY pair developed a Rising Wedge pattern. As you can see, the rate tested and retested the upside line, signaling exhausted buyers.
Now, it has reached the uptrend line and the 109.00 former low. These represent downside obstacles. Only activating the Rising Wedge reversal pattern may announce a broader correction.
CAD/JPY Outlook!
A new lower low, a bearish closure below 108.95 today's low activates a larger drop and is seen as a selling signal.
