More CAD/JPY slumps on cards after engulfing formation

FX:CADJPY   加元/日元
Chart pattern formed- Rising wedge pattern (on weekly plotting) and bearish engulfing candlestick pattern (on daily plotting).

Contemplating and synthesizing these chart and candlestick patterns, coupled with the fact that the major trend has gone in the downtrend, and a resembling bearish engulfing pattern has also formed in addition.

Subsequently, we foresee less likely to spike any further. Instead, more downside potential is foreseen.

Please be noted that ever since the shooting star and the back to back doji patterns have occurred exactly at 7 & 21DMA levels and they have shown their bearish effects so far (refer oval shaped area on daily plotting).

Well, for now, the major supports are observed at 87.780 levels and bears attempt to break these levels, any breach and the sustenance below would likely to evidence more slumps upto 87.458 levels where the next strong supports are observed.

On the flip side, the stiff resistance are at 88.1763 levels.

On a broader perspective, the prices are now attempting bounce but restrained below 21EMA levels (i.e. 88.1763 levels) and head towards wedge baseline, thereby, one could expect more slumps as both the leading oscillators have been constantly converging downwards to signal weakness (refer monthly chart).

21EMA levels are crucial and closely watched, as the pair has previously shown a fake jump sensing supports at this juncture and once again declined sharply in this month.

Trade tips:

It is wise to initiate shorts via tunnel spreads options strategy with upper strikes at 88.013 and lower strikes at 87.6465 levels, we advocate shorts via this leveraged products that are likely to add magnified impact on the trade yields.

Currency Strength Index: FxWirePro's hourly CAD spot index is displaying shy above -14 levels ( bearish ), while hourly JPY spot index was inching higher towards 112 ( bullish ) while articulating (at 07:37 GMT ).
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