Over the past few weeks, CADJPY has remained trapped inside a well-defined descending channel, consistently respecting lower highs and lower lows. From my perspective, nothing in the current price action suggests that the broader bearish trend has ended.
After rejecting the May highs, the market has been unable to reclaim any significant resistance, and every recovery continues to attract selling pressure. As long as price remains below the descending trendline and the supply area around 114.60ā114.80, I continue to favour downside continuation.
From a structural standpoint, my attention is focused on the institutional demand zone between 113.28 and 112.70. A decisive break below recent lows could open the door for a move towards the weekly support around 111.74, with 110.00 remaining the longer-term objective.
What strengthens my conviction isn’t just the chart itself.
The latest Commitment of Traders (COT) report continues to paint a bearish picture for the Canadian Dollar. Non-commercial traders remain heavily net short CAD, while speculative positioning on the Japanese Yen has gradually become less bearish compared to previous months. Although neither currency is particularly strong in absolute terms, relative strength still favours the Yen, supporting further downside on CADJPY.
Seasonality also adds another piece to the puzzle. Historically, July tends to be one of the stronger periods for the Japanese Yen, while the Canadian Dollar doesn’t display a consistent bullish seasonal pattern capable of offsetting that strength. It’s not a signal on its own, but it reinforces the broader bearish narrative.
Retail sentiment tells a similar story. Around 69% of retail traders remain long CADJPY, attempting to buy the current decline. From a contrarian perspective, I generally see this as additional confirmation that the downtrend may not be over yet.
For now, I’m not interested in chasing price lower. Instead, I’ll be watching for a corrective move back into resistance, where I can look for fresh bearish confirmation before considering new short positions.
Key Levels
š“ Resistance
114.60 ā 114.80
115.40 ā 115.90
š¢ Support
113.30 ā 112.70
111.60
110.00
My Bias
š Bearish
As long as price remains below 114.80, I believe sellers continue to control the higher-timeframe structure.