EUR/JPY – Bearish Setup from Rising Wedge Breakdown
⚙️ Pair: EUR/JPY
⏱ Timeframe: 30-Minute (Intraday Setup)
🧭 Trade Direction: Short (Sell)
🔍 Chart Pattern: Rising Wedge + Resistance Rejection
🧠 1. Market Structure and Pattern Formation
The primary formation on this chart is a Rising Wedge, which is a bearish reversal pattern often found near the top of an uptrend. Let's break it down:
🟨 What is a Rising Wedge?
A rising wedge is a converging channel with both trendlines sloping upwards. The key points are:
Higher Highs + Higher Lows: Suggesting ongoing bullish pressure.
But the range narrows, showing momentum weakness.
When price breaks the lower trendline, it often leads to a downward move.
📌 Chart Observations:
The wedge started forming after a strong bullish impulse from the support zone.
As price approached strong horizontal resistance (~162.400), momentum stalled.
Bearish divergence (not shown on chart but likely on RSI/MACD) might be present, reinforcing the bearish bias.
🧱 2. Support and Resistance Zones
🔺 Resistance Zone: 162.300 – 162.400
This zone was tested multiple times and held firm.
The top of the wedge also touched this level, creating a confluence area.
Price failed to break above this zone, leading to rejection – an early signal of weakness.
🔻 Support Zone: 161.600 – 161.800
Price previously bounced here, making it a high-probability target.
Bears will likely aim to push toward this support after the wedge breakdown.
🎯 3. Trade Setup Plan
This setup is based on confirmation of pattern breakdown, rejection of key resistance, and trend reversal dynamics.
🔸 Entry:
Enter short once the price breaks and retests the wedge’s lower boundary.
The retest candle should ideally be a bearish engulfing, rejection wick, or inside bar.
🔹 Stop Loss (SL):
Set above recent highs and resistance at 162.694.
SL placement considers potential liquidity spikes above resistance.
🎯 Take Profits:
TP1: 162.182 – Intraday structure level and short-term bounce zone.
TP2/Final Target: 161.712 – Next key support level and previous consolidation low.
🧭 4. Trade Management Strategy
After reaching TP1, move SL to breakeven to eliminate risk.
Trail your stop loss above lower highs as price descends.
Watch how price behaves at the final target – take full profit if a reversal forms.
📊 5. Technical Confluences Supporting the Trade
✅ Rising Wedge Pattern Breakdown
✅ Resistance Zone Rejection
✅ Psychological Level (~162.400) Reversal
✅ Clean Risk-to-Reward Setup (R:R > 2:1)
✅ Strong Bearish Momentum Candle Following Rejection
📌 6. Advanced Trader Notes
A rising wedge near resistance in an uptrend is often distribution – where smart money exits long positions and prepares for reversal.
The retest of the wedge breakdown offers a low-risk entry.
Momentum indicators (like RSI or MACD) may further confirm the bearish momentum – ideally showing divergence or a bearish crossover.
✅ Conclusion:
This EUR/JPY setup is a textbook example of price action meeting structure. A clean rising wedge breakdown from resistance gives a strong bearish edge. With a solid SL and defined targets, this trade offers excellent potential for intraday or short-swing traders.
⚙️ Pair: EUR/JPY
⏱ Timeframe: 30-Minute (Intraday Setup)
🧭 Trade Direction: Short (Sell)
🔍 Chart Pattern: Rising Wedge + Resistance Rejection
🧠 1. Market Structure and Pattern Formation
The primary formation on this chart is a Rising Wedge, which is a bearish reversal pattern often found near the top of an uptrend. Let's break it down:
🟨 What is a Rising Wedge?
A rising wedge is a converging channel with both trendlines sloping upwards. The key points are:
Higher Highs + Higher Lows: Suggesting ongoing bullish pressure.
But the range narrows, showing momentum weakness.
When price breaks the lower trendline, it often leads to a downward move.
📌 Chart Observations:
The wedge started forming after a strong bullish impulse from the support zone.
As price approached strong horizontal resistance (~162.400), momentum stalled.
Bearish divergence (not shown on chart but likely on RSI/MACD) might be present, reinforcing the bearish bias.
🧱 2. Support and Resistance Zones
🔺 Resistance Zone: 162.300 – 162.400
This zone was tested multiple times and held firm.
The top of the wedge also touched this level, creating a confluence area.
Price failed to break above this zone, leading to rejection – an early signal of weakness.
🔻 Support Zone: 161.600 – 161.800
Price previously bounced here, making it a high-probability target.
Bears will likely aim to push toward this support after the wedge breakdown.
🎯 3. Trade Setup Plan
This setup is based on confirmation of pattern breakdown, rejection of key resistance, and trend reversal dynamics.
🔸 Entry:
Enter short once the price breaks and retests the wedge’s lower boundary.
The retest candle should ideally be a bearish engulfing, rejection wick, or inside bar.
🔹 Stop Loss (SL):
Set above recent highs and resistance at 162.694.
SL placement considers potential liquidity spikes above resistance.
🎯 Take Profits:
TP1: 162.182 – Intraday structure level and short-term bounce zone.
TP2/Final Target: 161.712 – Next key support level and previous consolidation low.
🧭 4. Trade Management Strategy
After reaching TP1, move SL to breakeven to eliminate risk.
Trail your stop loss above lower highs as price descends.
Watch how price behaves at the final target – take full profit if a reversal forms.
📊 5. Technical Confluences Supporting the Trade
✅ Rising Wedge Pattern Breakdown
✅ Resistance Zone Rejection
✅ Psychological Level (~162.400) Reversal
✅ Clean Risk-to-Reward Setup (R:R > 2:1)
✅ Strong Bearish Momentum Candle Following Rejection
📌 6. Advanced Trader Notes
A rising wedge near resistance in an uptrend is often distribution – where smart money exits long positions and prepares for reversal.
The retest of the wedge breakdown offers a low-risk entry.
Momentum indicators (like RSI or MACD) may further confirm the bearish momentum – ideally showing divergence or a bearish crossover.
✅ Conclusion:
This EUR/JPY setup is a textbook example of price action meeting structure. A clean rising wedge breakdown from resistance gives a strong bearish edge. With a solid SL and defined targets, this trade offers excellent potential for intraday or short-swing traders.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.