USDJPY:Ascending triangle suggests a rise in price in a few days

FX:USDJPY   U.S. Dollar/Japanese Yen
I predict that a long trade would be most suitable in the next two days because of the formation of an ascending triangle pattern. This ascending triangle holds a resistance level at 124.560 which has only been tested a few times. As the resistance level does not hold such a high significance, it is more possible for the break-out of this pattern to result in an uptrend, rather than a downtrend. Since a downtrend is also a possibility, I have included this in the chart in case the market does show some promise for it. However, I take this to be an unlikely possibility because of the low strength of the resistance level , and the fact that this currency has so far been in a general uptrend since late July. Overall, although the trader must watch out for a downtrend, I predict that a long trade would be most suitable after the breakout of the ascending triangle .

As there are two possibilities (although one may be unlikely) it is a good idea to setup an entry trade for the respective uptrend or downtrend right after the break from the ascending triangle pattern.

(a) The breakout follows an uptrend:
The ascending triangle holds a height of 0.661 (0.53%), which means that the consequent uptrend (or downtrend) must also hold a similar height. Therefore, a Take Profit at 125.273 would be a suitable choice as that is the equivalent 0.661 height Also, the resistance level at 125.273 was tested on 12th August which gives it a much higher significance.

(b) The breakout follows a downtrend:
The downtrend will hold a height of 0.661, which means that a Take Profit at 123.82 would be suitable for this short trade as the uptrend would be at a similar height and right above the 123.79 support level .

In case a breakout does not occur until later, a stop loss could be setup right above the 124.462 resistance level for a short trade (option (b)) and right below the 124.462 resistance level for a long trade (option (a)).

Overall, for a long trade (option (a)):
Stop Loss: 124.382
Take Profit: 125.273
Risk/Reward Ratio: 16.54
United States
United Kingdom
Home Stock Screener Forex Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Account and Billing Sign Out