can be best described as - Reversal is a reversal pattern typically found on bar charts, line charts and charts.
Note the word – reversal pattern. That in itself means the formation needs to appear at the bottom of the downtrend. A breakout, let’s say on the , in the middle of the uptrend or at the top of the uptrend loses its relevance.
This is an often ignored rule and thus often leads to loss making trading decisions. Also note, the breakout needs to be supported by strong volumes, especially in case of stocks or indices. In FX, we can use the index available at http://www.tradingview.com to confirm support.
Now that we know what the formation is, we can proceed to have a look at the potential on the USD/JPY .
Clive Lambert, Director at Techs, pointed out to the potential formation on the Dollar-Yen on today’s London open finance show here - https://www.youtube.com/watch?v=P7-ksb3VHGM
Lambert says the pair could be heading higher to 107.50 (July 21 high), which would result in a formation. Of course, the spot needs to take out host of important resistance levels on the way higher namely 103.55 (June 16 low), 104.00 (July 26 low), 104.50 (falling resistance), 105.55 (May 3 low).