HKD/JPY 1H Chart: Channel Down

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The Hong Kong Dollar has weakened considerably against the Japanese Yen . Its latest fall started mid-July and resulted in the formation of a channel down. Moreover, the pair is likewise trading in a minor symmetrical triangle. The exchange rate, however, failed to reach the upper boundary of the latter in its last surge and consequently returned back at its bottom line circa 14.20. Thus, the given pattern may be breached to the downside next week. Despite bearish technical indicators, it is quite likely that the Hong Kong Dollar still manages to push higher until the upper channel boundary in the 14.28/32 area, reinforced by the 50% Fibonacci retracement . Nevertheless, the given currency still needs to surpass the 55-, 100– and 200-hour SMAs and the monthly PP near 14.28 along the way. If these levels halt the pair, a breakout is to occur even sooner.
Trade closed: target reached

The Hong Kong Dollar is trading against the Yen in two patterns simultaneously. The senior pattern is a channel down which was formed in early July.

As the rate failed to reach the lower channel boundary during its last three wave, the steepness of the lower line needed adjustment, thus demonstrating that a more accurate pattern for the given momentum is a falling wedge.

During its last wave, the rate managed to breach the 55-hour SMA from below, but halted at the 100-hour SMA. In case the rate manages to diminish its trading range within the aforementioned wedge, an upward breakout from the 13.95/14.00 area should follow.
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