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Let's start with Friday afternoon's CAD/JPY technical analysis feature article ( CAD/JPY poised for a 700 pip drop )...

Needless to say the CAD/JPY has not dropped 700 pips most likely due to BoJ's pseudo-intervention ( USD/JPY: Keeping Its Head Above Water Thanks to BoJ , by Kathy Lien). However, the bearish butterfly pattern discussed on the 1hr CAD/JPY chart did manage to hit an initial profit target in which case profit was taken on half the position with stops moved to break even.

To clarify, we discussed how there was a bit of room to the upside to the 161.8% extension of XA near 72.50 in which a valid butterfly pattern could still occur. In fact, there was another push higher to exactly 72.50 after which a pullback to just beneath the 38.2% of CD occurred (see 1hr CAD/JPY chart below) reaching the initial profit target.

This level of Fibonacci support halted any further losses, and the CAD/JPY turned reaching new highs. These shallow retracements to 38.2% are often signs of a strongly trending market (when a new high/low is acheived), and as a result the CAD/JPY continued to climb higher eventually reaching previously established resistance near 73.75.

The bullish butterfly pattern developing on the daily chart is still intact, although this looks more unlikey as the BoJ will ultimately play a large factor.

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