CADJPY: Breakout from Channel Up Formation Highlights Strength

CADJPY: Breakout from Channel Up Formation Highlights Strength
In today's technical analysis, we're taking a closer look at an unusual pairing: CADJPY. This instrument warrants our attention due to the significant strengthening of the Japanese Yen we've witnessed today, which represents a shift from the trend of recent weeks.
A Channel Up formation has been evident on CADJPY since mid-March. The price advanced within this channel until mid-June, specifically June 16th. However, rather than descending, the price broke through the upper line of this Channel Up formation on the 16th, heading higher and showing remarkable strength. This upward breakout is quite rare for instruments within a Channel Up formation, which typically break through the lower line, thus giving a sell signal. In this case, the breakout amplified the already existing buy signal.

Currently, we're witnessing a correction that's headed towards the upper line of the Channel Up formation. Previously a resistance, this line is now being tested as a support, and so far, the price remains above this line, indicating the support is holding. Should a breakout occur, another support to watch is the red mid-term uptrend line, which connects higher lows from May 11th onwards. As long as the price stays above this red line, the sentiment remains decidedly positive.

However, if the price reenters the Channel Up formation and breaches the red line, that would signal a weakening, though the probability of that happening currently seems relatively low.
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