(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend line in red; Fibonacci retracement levels in grey; 50-period simple moving average in light blue.)
4/02/2008 CAD/JPY Price on the CAD/JPY WEEKLY chart, as shown, has just reached a critical juncture as of this writing. A very significant trendline (as represented on the chart in red) has been touched accurately several times both as support and resistance since around August 2006. As displayed on the chart, this line first acted as resistance, and then as support, and is currently acting once again as resistance after price broke down below the line just a couple of weeks ago. The current weekly bar has just bumped up against the line, which presently also coincides with a key 38.2% Fibonacci retracement level (the high-to-low retracement span being measured from the swing high on 2/26/2008 to the last swing low on 3/20/2008). Additionally, if we are to view price action above the line as a long-term head-and-shoulders pattern reversing the previous uptrend, we can also view the red line as the neckline that was broken, followed by a pullback to the line. And if this is the outlook, barring a breakout above the line, we might look for price at some near-term point to make a move back down. If indeed this occurs, the next major support to the downside resides in the region of the last swing low around 96.00.
Chief Technical Analyst
IMPORTANT NOTICE: These comments are for information purposes only. The information contained on this document does not constitute a solicitation to buy or sell by FX Solutions, LLC., and/or its affiliates, and is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law. Opinions, market data, and recommendations are subject to change at any time. Forex trading involves substantial risk of loss and is not suitable for all investors.