EUR/JPY 1H – Rising Wedge Breakdown with Bearish Retest | Short Setup Explained
Instrument: Euro / Japanese Yen (EUR/JPY)
Timeframe: 1-Hour (H1)
Pattern: Rising Wedge
Signal Type: Bearish Reversal & Retest Trade
Posted On: April 29, 2025
🔍 Chart Pattern Overview: Rising Wedge Breakdown
The current EUR/JPY price structure exhibits a textbook Rising Wedge pattern, which is typically a bearish reversal signal when appearing after a sustained bullish rally.
This pattern is formed by:
Converging trendlines, with higher highs and higher lows,
Decreasing volume, suggesting weakening bullish interest,
A final breakout to the downside, which we now see confirmed.
In this case, the wedge spanned from April 6 to April 28, encapsulating a prolonged uptrend with increasingly weaker bullish attempts. Price broke down convincingly through the lower trendline, confirming the wedge and signaling a potential trend reversal or correction.
🔑 Key Technical Levels & Price Action Insights
🔷 Resistance Zone (~163.00–163.10):
Marked multiple rejections.
This level served as the wedge’s upper boundary.
It is now the structural invalidation point for shorts. A move above this zone would negate the bearish outlook.
🟧 Support Turned Resistance (~161.533):
Previously provided solid buying interest, forming the wedge’s lower trendline.
After the breakdown, this area was retested and rejected, confirming seller strength and completing a classic break–retest–drop formation.
This level is now the ideal entry point for short positions.
🎯 Bearish Target Zone (~160.912):
Derived using the measured move technique, where the height of the wedge is projected downward from the breakout point.
This level is also aligned with prior structure (a mini-demand zone), creating a strong technical confluence for a take-profit level.
📊 Market Structure Analysis
Trend Prior to Pattern: Bullish impulse leading into the wedge, which transitioned into a distribution phase (wedge pattern).
Pattern Phase: Price action formed higher highs/lows but with declining momentum, indicating weakening demand.
Breakout Confirmation: Strong bearish candle broke wedge support, signaling structure shift from bullish to bearish.
Retest Confirmation: Price action pulled back to retest the former support zone at 161.533 and was rejected, validating the breakout.
🧠 Trade Setup Summary
Element Value
Entry Point 161.533 (after retest)
Stop Loss (SL) 163.070 (above wedge resistance and invalidation level)
Take Profit (TP) 160.912 (confluent with past support and wedge projection)
Risk-Reward Approx. 1:2 or higher
This setup aligns with institutional principles of "structure → confirmation → entry" and provides a clean, controlled trade idea.
🛠️ Risk Management & Strategy Consideration
SL above structure highs reduces chance of premature stop-out.
TP is conservative, aligning with historical structure and measured move theory.
Traders may consider scaling out near TP or trailing the stop after price breaks below 161.00 for additional downside capture.
Avoid chasing entries below 161.533 unless there's new structure (e.g., bear flag, retest of intraday resistance).
🌐 Broader Market Sentiment
EUR/JPY’s prior bullish momentum is now facing resistance due to macroeconomic tightening from Japan and uncertain eurozone inflation data.
Yen strength has started emerging on lower timeframes, which could fuel further downside, supporting this technical outlook.
Volatility expected around Tokyo and Frankfurt sessions—manage position sizing accordingly.
📆 Trade Duration Outlook
Short-term swing setup, expected to play out over the next 24–48 hours, depending on market volatility.
Watch for any rejection at mid-level supports (161.00–161.10). If that breaks, acceleration to TP becomes highly probable.
📌 Conclusion
This EUR/JPY setup represents a high-probability bearish opportunity following a well-structured Rising Wedge breakdown. The combination of clear trendlines, defined risk levels, and a measured move target makes this trade compelling for disciplined traders.
The break – retest – continuation structure is a fundamental concept in price action trading, and this example illustrates it perfectly. Traders should remain alert for confirmation candles and volume behavior before finalizing entries.
Instrument: Euro / Japanese Yen (EUR/JPY)
Timeframe: 1-Hour (H1)
Pattern: Rising Wedge
Signal Type: Bearish Reversal & Retest Trade
Posted On: April 29, 2025
🔍 Chart Pattern Overview: Rising Wedge Breakdown
The current EUR/JPY price structure exhibits a textbook Rising Wedge pattern, which is typically a bearish reversal signal when appearing after a sustained bullish rally.
This pattern is formed by:
Converging trendlines, with higher highs and higher lows,
Decreasing volume, suggesting weakening bullish interest,
A final breakout to the downside, which we now see confirmed.
In this case, the wedge spanned from April 6 to April 28, encapsulating a prolonged uptrend with increasingly weaker bullish attempts. Price broke down convincingly through the lower trendline, confirming the wedge and signaling a potential trend reversal or correction.
🔑 Key Technical Levels & Price Action Insights
🔷 Resistance Zone (~163.00–163.10):
Marked multiple rejections.
This level served as the wedge’s upper boundary.
It is now the structural invalidation point for shorts. A move above this zone would negate the bearish outlook.
🟧 Support Turned Resistance (~161.533):
Previously provided solid buying interest, forming the wedge’s lower trendline.
After the breakdown, this area was retested and rejected, confirming seller strength and completing a classic break–retest–drop formation.
This level is now the ideal entry point for short positions.
🎯 Bearish Target Zone (~160.912):
Derived using the measured move technique, where the height of the wedge is projected downward from the breakout point.
This level is also aligned with prior structure (a mini-demand zone), creating a strong technical confluence for a take-profit level.
📊 Market Structure Analysis
Trend Prior to Pattern: Bullish impulse leading into the wedge, which transitioned into a distribution phase (wedge pattern).
Pattern Phase: Price action formed higher highs/lows but with declining momentum, indicating weakening demand.
Breakout Confirmation: Strong bearish candle broke wedge support, signaling structure shift from bullish to bearish.
Retest Confirmation: Price action pulled back to retest the former support zone at 161.533 and was rejected, validating the breakout.
🧠 Trade Setup Summary
Element Value
Entry Point 161.533 (after retest)
Stop Loss (SL) 163.070 (above wedge resistance and invalidation level)
Take Profit (TP) 160.912 (confluent with past support and wedge projection)
Risk-Reward Approx. 1:2 or higher
This setup aligns with institutional principles of "structure → confirmation → entry" and provides a clean, controlled trade idea.
🛠️ Risk Management & Strategy Consideration
SL above structure highs reduces chance of premature stop-out.
TP is conservative, aligning with historical structure and measured move theory.
Traders may consider scaling out near TP or trailing the stop after price breaks below 161.00 for additional downside capture.
Avoid chasing entries below 161.533 unless there's new structure (e.g., bear flag, retest of intraday resistance).
🌐 Broader Market Sentiment
EUR/JPY’s prior bullish momentum is now facing resistance due to macroeconomic tightening from Japan and uncertain eurozone inflation data.
Yen strength has started emerging on lower timeframes, which could fuel further downside, supporting this technical outlook.
Volatility expected around Tokyo and Frankfurt sessions—manage position sizing accordingly.
📆 Trade Duration Outlook
Short-term swing setup, expected to play out over the next 24–48 hours, depending on market volatility.
Watch for any rejection at mid-level supports (161.00–161.10). If that breaks, acceleration to TP becomes highly probable.
📌 Conclusion
This EUR/JPY setup represents a high-probability bearish opportunity following a well-structured Rising Wedge breakdown. The combination of clear trendlines, defined risk levels, and a measured move target makes this trade compelling for disciplined traders.
The break – retest – continuation structure is a fundamental concept in price action trading, and this example illustrates it perfectly. Traders should remain alert for confirmation candles and volume behavior before finalizing entries.
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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.