The sharp fall in the JPY last week was due to all the world’s central banks being expected to raise interest rates to counter surging inflation. The one central bank that is not expected to respond is the BoJ. Their yield curve control keeps Japanese bond yields low and the deflationary forces Japan faces are expected to keep the BoJ on hold. However, remember that the BoJ is starting to see some small signs of inflation now.

We will be providing a break down of the analysis from the intraday monthly time frame to the interday four hourly time frame in order to understand where the market is heading next and what can be the chances of a bearish reversal for the required correction to take place. On the monthly chart we can see that the pair has broken out of a major monthly resistance 91.14 that lyes side by side to the 50% fibo retracement level, which indicates that the Canadian Dollar versus Japanese Yen has set 61.8% fibo retracement level as its next targeted destination i.e 94.55. From the perspective of elliot wave pattern, we are in the 5th wave of impulsive bullish 5 wave pattern - which is expected to put an end to CADJPY hawkish sentiments and enter into a bearish corrective structure before making any further gains. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Coming down to the weekly time frame, the higher degree of bearish correction ended at 84.60 on 15th Aug while the market price being supported by exponential moving average 50 - preventing the pair from any further losses. The aforementioned scenario was proceeded by an impulsive bullish behaviour in the daily time frame that lifted the pair above 38.2% and 50% fibo retracement level i.e 87.73 and 91.14. Now the relative strength index in the daily and interday time frames entered into strongly overbought conditions and the pair is expected to favor the bears and adapt to a bearish corrective structure, but that too can be anticipated after the pair has provided us with a touch down at 94.55. An early reversal or failure to break above 93.30 price action - would pull the pair lower towards 91.14 and 87.73 before continuing its hawkish trend. 

CADJPY In Its Final Wave On Monthly Chart

Oct 19 2021