The Yen currency pair has been a very slow mover this year – contrary to the 2nd half of 2012 and 2013 when the Yen weakness trend offered a ton of opportunity.
1) The USDJPY consolidation has lasted for more than a half a year
2) Price has been trapped in a tight 220 pip range for 4 months since the beginning of April
Within that consolidation, the USDJPY is breaking upwards and price could have space towards the top of the range (orange lines). The USD strength / Yen weakness is having an impact on the EURJPY and GBPJPY as well.
EURJPY INVERTED H&S
The EURJPY has a potential reversal chart pattern named the inverted head and shoulders. The pattern is also occurring very close to a daily and weekly support level at 136.25. This is a scenario where a trend could have troubles with continuing – and the EURJPY down trend is certainly facing problems.
[tweetable alt=””]The trend lines help traders with placing clear “lines in the sand” on the chart.[/tweetable] Resistance and support trend lines mark the borders for our analysis:
1) a break below support translates into a decent chance of a downtrend continuation
2) a break above resistance translates into a decent chance of a reversal / retracement
GBPJPY FLAT BUT BREAKING
The Ferrari of all the pairs (GBPJPY) has a similar structure: the GJ is also near daily support (magenta) and it too has mad multiple bounces off of a wedge (green line). Although the GBPJPY broke 2 neck lines (blue trend lines) of a head and shoulders pattern on top, price has not picked up any bearish momentum so far. The zones to monitor are:
a) A break below the bottom (magenta) or
b) A break above the resistance (light blue line)
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