CADJPY’s strong rebound from the 73.76 low on March 09 seems exhausted, based on the RSI (14) reading.
The pair has not yet filled the long-term descending regression channel range at the upper trendline near 83.00. However, the miss of the 82.00 round resistance on June 05 raises the chances of a July decline.
Shorts at the 81.90 area provide a short-term descending regression channel that limits potential long bets at the upper trendline near 81.00.
A minor breakout of the 79.88 R1 resistance will make room towards the said level. A breakout of the short-term channel, however, will provide an initial base for a higher top at the long-term channel’s trendline near 83.00, as indicated in the chart below. Both can be expected.
With sentiment mixed, the current structure can be characterized by a flatness. Both sides of the sideways market are prone to a breakout.
The lower side of the range at the median regression trendline illustrates a strong bottom. While short bets are technically unsupported by the RSI (14), reversing off the R1 resistance will change sentiment.
That suggests that the indicator’s divergence signal in June could keep the upside capped below R1. Otherwise, a sustained recovery up to the TR1 trendline could provide an additional RSI (14) signal and this can see the downward trend prevailing.