Chart Art: CAD/JPY Tests Correction Levels Ahead of Canada’s Jobs Report

CAD/JPY has been cruising lower inside a descending channel on its daily time frame, pulling up from its recent slide as oil prices tick higher.

Canada’s employment data on Friday could pose the next major test for this pair.

Check out these key inflection points on the long-term chart!

CAD/JPY: Daily

Safe-haven demand and a hawkish Bank of Japan (BOJ) have kept the yen supported over the past few months, while easing oil prices and a cautious Bank of Canada (BOC) have weighed on the Loonie.

However, the Canadian central bank surprised with a more hawkish than expected statement last week, allowing the currency to pull up from its slide.

Is this merely a retracement from the longer-term downtrend though?

CAD/JPY is testing the mid-channel area of interest that lines up with the 50% Fibonacci retracement level and the 113.00 major psychological mark.

A larger correction could still reach the 61.8% Fib near R1 (113.80), the channel resistance, and the 100 SMA dynamic inflection point. Moving averages suggest that bears could stay in control while the 100 SMA remains below the 200 SMA.

In that case, reversal candlesticks at any of these potential ceilings could allow CAD/JPY to resume the slide, possibly making its way back to the swing low around S1 (111.07) and the 111.00 major psychological support.

On the other hand, long green candles closing above the channel top and 200 SMA could point to a possible reversal from the months-long selloff.

Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.