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USD/JPY short-term weakness, building a triangle

USD/JPY reversed yesterday on Fed Chair Powell’s reversal in hawkish tone after tagging the top-side trend-line which makes up a developing triangle formation since early October. The reversal is gaining traction thus far in today’s trade and should continue to do so in the very near-term.

However, at this time the downside looks limited as the triangle tightens up towards the apex. While this happening will mean that trading will worsen in terms of range expansion, with a little patience an explosive breakout could be in store just down the road.

Which way? That we will have to wait for. But the positioning of the triangle comes right at resistance from all the way back to May of last year, adding to the pattern's potential explosiveness. A bullish breakout will require clearance out of the triangle and above 11473 for USD/JPY to gain legs. A break breakdown will require the underside trend-line of the pattern to be broken.

Given the trend is higher since earlier in the year and the fact that the pattern is forming just below big resistance, a break to the top-side will hold more appeal, but in either case I’ll wait for confirmation before running with a trading bias.

USD/JPY Daily Chart (Near-term weakness, Triangle forming)

USD/JPY daily chart, triangle at resistance

These 4 tenets can help bolster your Confidence as a Trader.

USD/CAD rejection near June high has trend-line back in focus (again)

Yesterday’s reversal from near the June high could bring some pressure on USD/CAD soon. There is strong trend support (most visible on the 4-hr time-frame), which if broken should lead to decent downside follow-through. However, the trend-lines are to be trusted until broken.

But given the powerful rejection yesterday we may finally see USD/CAD not make good on the trend support it’s relied on for several weeks, and turn the trading bias in favor of shorts. Support to watch on a break arrives around 13180, 13127, 13050, the trend-line from February, and the 200-day which come in close to 13000.

USD/CAD Daily Chart (Rejection at June high)

USD/CAD daily chart, rejection at June high

USD/CAD 4-hr Chart (See if trend support can continue to hold)

USD/CAD 4-hr chart, see if trend support can continue to hold

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday’s for the Becoming a Better Trader webinar series.

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX