Hello forex peeps! What I have here on the canvass is the daily chart of the US dollar versus the Japanese yen (USD/JPY). Last May, the USD/JPY currency pair was trading at 94.90 until it fell all the way to 80.33 last November, just a little above its 79.75 all-time low. From there on, the pair bounced and started moving sideways. In the process, I noticed a symmetrical triangle forming which is a chart pattern we in LaidTrades love trading!
A symmetrical triangle is generally a continuation area pattern but could be a reversal as well. Most of the symmetrical triangles I encountered were continuation moves and broke towards the trend’s direction. In the USD/JPY’s case, the trend is downwards so my overall bias for this formation is bearish. If the US dollar weakens further and the breakdown from this formation occurs, the yen could reach an exchange rate of ¥79.75 for a $buck! Like I mentioned, 79.75 is the all-time low of the greenback against the yen and was tapped in 1995. For sure, there will be a heavy buying pressure at that stronghold and before it gets there, the 81.00 and 80.00 support levels need to be cleared out. When the value goes below the 14-period moving average in the dailies while the triangle is still intact, I could start positioning my short sell orders and place my stops above the moving average. On the flip side, in case the pair reverses, there could be some selling pressure at the triangle’s resistance. Then the next hurdles after that are the 84.50 and 86.00 resistances.