Japanese Yen Triangle Break Will Trigger Fireworks
Prepared by Jamie Saettele, CMT
Last week’s spike higher (on 1/25) in the USDJPY completed the final leg of a bearish triangle that had been underway since August 1st. The rally has been completely retraced, which speaks to the powerful psychological forces that are responsible for price patterns. Specifically, the end of a triangle (wave E) is marked by sharp countertrend moves (in this case up) that is simply too alluring to many traders. As such, many traders buy into the move just before it reverses sharply in the other direction. The eventual liquidation of these trades serves to fuel the breakout and final wave (in this case down). 7660 is resistance. Exceeding 7677 would shift focus to 7690 and 7730.
Bottom Line - flat
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.