Triangle Breakout Triggering for USDJPY Dollar Yen

FOREX traders – or those who simply monitor currencies as part of an intermarket picture – should be aware of the breakout trigger and potential expansion developing in the USD-JPY (US Dollar/Japanese Yen) pair.

Let’s take a look at the current “triangle” breakout and then compare it to prior breakouts:

First, I highlighted the current Triangle or low-volatility consolidation pattern that developed through 2014.

We see an initial trigger-break in July through the 102.000 level which resulted in a retest of the upper trendline (a great buy signal) into August.

The next phase was the “bull flag” breakout and impulsive upward rally from 102.000 to the current 104.000 target.

We’ll be focusing our attention on the simple 104.000 level for planning trades:

We’ll be “breakout bullish expansion” biased above this level and otherwise cautious beneath it.

Simply compare the late 2013 (larger/wider) triangle breakout with the retest of prior price swing highs as price traveled a pathway to new highs.

We can take the comparison back in time by comparing similar triangle (consolidation) price patterns:

I’m showing three recent weekly triangle patterns (and the expansion phases) as well as the smaller 2010 triangle.

This is not to say that price will repeat with a multi-month breakout currently, but simply to compare the past to the present.

Odds would favor a potential continuation movement to the upside, but we must always balance that against real-time price movement that may surprise to the downside.

Finally, be sure to read yesterday’s post regarding the pure Breakout Pattern in the US Dollar Index.

Corey Rosenbloom, CMT
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