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- GBP/JPY Ascending Triangle Trade
- Forex Technical Analysis – Short the EUR/USD – Bearish Channel
- Forex Technical Analysis – USD/JPY – Bullish Flag
| GBP/JPY Ascending Triangle Trade Posted: 15 Jul 2010 12:32 AM PDT
The pair has been consolidating over the past 6 weeks while forming a chart pattern that looks to break to the downside in a continuation with the long term trend. Following the sharp deprecation in the price of the pair during the month of May, the GBP/JPY has consolidated its losses and has formed an ascending triangle pattern. A halt to the trend can be verified by the flat 20-day exponential moving average. Also a significant drop off in volatility is shown by the decrease in the Average True Range (14). A tightening of the daily chart’s Bollinger Bands confirms the reduced volatility in the pair. Because the long term trend is to the downside, it is assumed that a breakout will be in this direction. However, traders are not limited to one direction in this trade setup. By placing a stop on the inside of the triangle to guard against a false breakout, losses can be minimized should the breakout fail to materialize. Therefore, a trade setup can be in either direction. A breakout to the upside would target the resistance level at 138.25, followed by the significant resistance line of 139.25 and a long term target at 140.50, the 38.2% Fibonacci retracement level from the downward trend that began in August of 2009. If the long term trend continues and the pair breaks out of the triangle to the downside, the first target would be the support at 131.30, followed by the bottom of the downward trend at 126.75.
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| Forex Technical Analysis – Short the EUR/USD – Bearish Channel Posted: 31 May 2010 06:52 AM PDT
The pair has experienced a bit of a consolidation since reaching a low of 1.2150 last week. As such, the price has climbed close to the upper boundry of the bearish channel that has formed on the daily chart, presenting a possible trade setup to go short on the pair. Friday's trading had the EUR/USD climbing to a daily high of 1.2450. This daily high was the third contact point for the downward sloping trend line, making it a significant trend line. A parallel line drawn below the price action displays a bearish channel. The long term downward sloping trend line is also displayed, taking into account all the price action for the bearish trend. A trade setup to go short on the EUR/USD is forming as the price moves closer to the upper boundary of the channel. Going short at a trend line can be one of the best ways to enter into a trending market. A protective stop can be placed above the resistance level (R1) at 1.2390 and the support level (S1) at 1.2150 can be used as a price target. At the current spot price of 1.2315, this would give roughly a 2:1 profit to risk reward.
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| Forex Technical Analysis – USD/JPY – Bullish Flag Posted: 23 Apr 2010 02:06 AM PDT
The USD/JPY appears to be ending a period of consolidation as the pair formed a bullish flag pattern on the daily chart. Below is a possible trade setup for the USD/JPY The daily chart shows a sharp price appreciation in the pair beginning on March 24th and continued on to set the yearly high for the pair at a price of 94.78. Following this sharp price jump of 432 pips, the pair formed a price channel with a negative slope as shown in the chart below. The Forex Technical Analysis shows this pattern to be a bullish flag. To trade the pattern, traders may want to wait for a confirmation of the breakout. An entry long on the USD/JPY at 10% above the flagpole at the price of 95.21 (432*0.1 = 43) should provide enough clarity. This would also allow the price to breach the resistance line at the price of 95. A stop of 25% of the flagpole can be set at 93.70 (432*0.25). This would make for a risk of 108 pips and help contain the risk of the trade. The first take profit level would be the amount at risk, or 108 pips, at a price level of 96.29. A second take profit level would be the full length of the flagpole of 432 pips at a price of 99.53.
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