CADJPY Could Face A Sharp Drop Soon


CADJPY has five waves down and three waves up, which is an ideal pattern for a bearish set-up.

At the end of May, we have seen a sharp and impulsive drop with five waves and as we know after every five waves, a three-wave correction follows. As you can see, a three-wave A-B-C correction can be in final stages, right at ideal resistance zone around 61,8% Fibonacci retracement. So, be aware of a drop, either from here or from slightly higher levels around 86 area and 78,6% Fibonacci retracement. We remain bearish as long as it’s trading below 87.08 invalidation level.

One of main reasons for drop could be stocks, which can be trading near resistance zone. Why stocks? Well, stocks are more or less correlated with USDJPY and when stocks and USDJPY begin to fall, Japanese yen can become very strong and usually causes a decline on all XXX/JPY crosses.

Another reason can be Crude oil, which fell sharply at the end of May and as we know, Canadian dollar is correlated with Crude oil, because Canada has the largest oil reserve. So, if we expect more weakness on Crude oil, then Canadian dollar may face even more weakness.

So, strong JPY against weak CAD can be a perfect combination, just keep in mind that in Elliott wave theory, first we want to see a five-wave decline away from resistance zone to confirm a bearish reversal. If CADJPY continues lower and breaks below 84 level, then we can expect even more weakness towards new lows.

4h CADJPY June 06 2018

Elliot Wave Technical Analyst

Gregor Horvat is based in Slovenia and has been in the Forex market since 2003. He has been working for Capital Forex Group and

He is the owner of, which prov...continued

Comments on this analysis

Your email address will not be published. Required fields are marked *

Latest Related News

These S&P Relative Developments Reinforce A Risk-Off Restoration

A great deal is going on in the macro department and this can make it difficult to understand where risk is flowing in broader market as well as the G-10 FX space. A constant back-and-forth between virus related risks and U.S.-China tensions is continuously squeezing equity rallies which has somewhat seeped into G-10 FX risk proxies, stalling rather buoyant rallies. We take a look at… Continued


As stocks move to the upside, our attention is on CADJPY as this pair shows a nice bullish development with room for more upside after any short-term set-back of wave 3 or even maybe wave 2). More upside should follow this week. CADJPY, 4h Cable came nicely to the downside, beneath wave a level for a spike so a flat correction can come to an… Continued

Elliott wave Analysis: CADJPY and EURUSD Intra-day Movement

Hi traders, CADJPY can be unfolding five waves up, but we still see an unfinished, big five-wave rally, so seems like pair just slowed down into wave 4, where ideal support would be here around 38,2% Fibo. retracement and 83.15 level. If it continues higher back above 83.65 region, then price can go towards 84.50 - 84.80 area for wave 5.  Invalidation level is 82.70.… Continued

Forex Brokers in your location


79% of retail investor accounts lose money


79,3% of retail investor accounts lose money


74,9% of retail investor accounts lose.


75% of retail investor accounts lose money when trading CFDs with this provider.