EURJPY Technical Analysis – Rising Wedge Breakdown Suggests Bearish Reversal
📅 Date: May 12, 2025
📈 Timeframe: 1-Hour (H1)
📊 Pair: EUR/JPY
🧩 Chart Pattern Overview
The current price action of EUR/JPY reveals the formation of a Rising Wedge—a classic bearish reversal pattern. This structure is characterized by two converging upward-sloping trendlines, where the rate of price increase slows down, indicating a weakening bullish momentum and the potential for a downside breakout.
Upper Trendline (Resistance): Price has made multiple touches, respecting the upper boundary, confirming the wedge structure.
Lower Trendline (Support): Similarly, the lower trendline has held as a base for several higher lows before the eventual breakdown.
The wedge started forming around May 6, 2025, and price continued to trade within this narrowing range until it broke out on the downside.
🔍 Key Technical Levels
Resistance Zone: Around 164.800 – 165.000, which also aligns with the upper wedge trendline and recent highs.
Support Zone (Broken): The lower wedge trendline, formerly acting as dynamic support, now broken, has become a bearish signal.
Horizontal TP Area: Around 163.493, a previous consolidation zone and minor support.
Final Target: 162.491, identified from historical horizontal support and potential measured move from the wedge pattern.
Stop Loss (SL): Set at 165.607, above the wedge high and outside the invalidation level of the pattern.
📌 Trade Setup Details
Entry Trigger: After the breakdown of the lower trendline and retest confirmation.
Sell Entry: Near the wedge breakdown point or on confirmation from rejection at 163.493.
Take Profit 1 (TP1): 163.493 – short-term pullback and a potential minor bounce zone.
Take Profit 2 (TP2): 162.491 – expected full measured target based on wedge height.
Stop Loss: 165.607, above the rising wedge and recent high.
💬 Market Outlook & Sentiment
The breakdown of a rising wedge is often a sign of a bearish shift in sentiment. Given the structure of this pattern:
Buyers appear to be losing control.
The market is potentially transitioning into a short-term corrective phase.
A move down to 162.491 is technically justified based on the wedge projection.
This setup aligns with textbook wedge behavior and provides a favorable risk-to-reward ratio for short sellers.
⚠️ Risk Management Reminder
As always, ensure proper risk management:
Never risk more than 1–2% of your trading capital per trade.
Wait for confirmation of the breakdown and rejection from the retest level before entering.
✅ Summary
Pattern: Rising Wedge (Bearish)
Bias: Bearish below 165.000
TP1: 163.493
TP2: 162.491
SL: 165.607
📅 Date: May 12, 2025
📈 Timeframe: 1-Hour (H1)
📊 Pair: EUR/JPY
🧩 Chart Pattern Overview
The current price action of EUR/JPY reveals the formation of a Rising Wedge—a classic bearish reversal pattern. This structure is characterized by two converging upward-sloping trendlines, where the rate of price increase slows down, indicating a weakening bullish momentum and the potential for a downside breakout.
Upper Trendline (Resistance): Price has made multiple touches, respecting the upper boundary, confirming the wedge structure.
Lower Trendline (Support): Similarly, the lower trendline has held as a base for several higher lows before the eventual breakdown.
The wedge started forming around May 6, 2025, and price continued to trade within this narrowing range until it broke out on the downside.
🔍 Key Technical Levels
Resistance Zone: Around 164.800 – 165.000, which also aligns with the upper wedge trendline and recent highs.
Support Zone (Broken): The lower wedge trendline, formerly acting as dynamic support, now broken, has become a bearish signal.
Horizontal TP Area: Around 163.493, a previous consolidation zone and minor support.
Final Target: 162.491, identified from historical horizontal support and potential measured move from the wedge pattern.
Stop Loss (SL): Set at 165.607, above the wedge high and outside the invalidation level of the pattern.
📌 Trade Setup Details
Entry Trigger: After the breakdown of the lower trendline and retest confirmation.
Sell Entry: Near the wedge breakdown point or on confirmation from rejection at 163.493.
Take Profit 1 (TP1): 163.493 – short-term pullback and a potential minor bounce zone.
Take Profit 2 (TP2): 162.491 – expected full measured target based on wedge height.
Stop Loss: 165.607, above the rising wedge and recent high.
💬 Market Outlook & Sentiment
The breakdown of a rising wedge is often a sign of a bearish shift in sentiment. Given the structure of this pattern:
Buyers appear to be losing control.
The market is potentially transitioning into a short-term corrective phase.
A move down to 162.491 is technically justified based on the wedge projection.
This setup aligns with textbook wedge behavior and provides a favorable risk-to-reward ratio for short sellers.
⚠️ Risk Management Reminder
As always, ensure proper risk management:
Never risk more than 1–2% of your trading capital per trade.
Wait for confirmation of the breakdown and rejection from the retest level before entering.
✅ Summary
Pattern: Rising Wedge (Bearish)
Bias: Bearish below 165.000
TP1: 163.493
TP2: 162.491
SL: 165.607
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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.