📊 Technical Analysis Overview:
Rising Wedge Formation:
The price has been moving within a narrowing upward channel (rising wedge), characterized by higher highs and higher lows. However, the upward momentum is weakening as buyers fail to make significant progress at each new high. This pattern typically leads to a bearish breakdown when the support trendline is breached.
Key Resistance Zone:
Price is struggling around the 0.006985 level, which aligns with previous highs and psychological resistance. This zone also coincides with the upper boundary of the wedge, reinforcing it as a strong supply area.
Bearish Signal Potential:
A breakdown below the wedge's lower trendline would signal a shift in market sentiment, as it indicates sellers are gaining control. Volume confirmation would strengthen this signal, especially if the breakout occurs on increased selling pressure.
🎯 Trade Setup:
Entry:
Watch for a clean and confirmed break below the wedge support line, ideally with a strong bearish candlestick (e.g., engulfing, marubozu) to validate the move.
Target:
The projected target is around 0.006865, derived by measuring the height of the wedge and projecting it downward from the breakout point. This target also aligns with a previous consolidation area, adding confluence to the setup.
Stop Loss:
A prudent stop loss can be placed slightly above the recent high at 0.007017, beyond the upper wedge boundary. This protects the trade from potential false breakouts or unexpected volatility.
🧠 Market Psychology Behind the Pattern:
Rising wedges often develop during uptrends as momentum fades. Although price continues to make higher highs, the rate of ascent slows, indicating that buyers are losing strength. When sellers step in and break the support, the market often reacts sharply, leading to swift moves downward as trapped buyers exit their positions.
⚠️ Risk Management and Considerations:
Always confirm the breakout with volume or supporting indicators (e.g., RSI divergence, MACD crossover).
Be cautious of false breakouts—wait for a retest of the broken support as new resistance if you prefer a conservative entry.
Adjust position sizing according to your risk tolerance and account size. Never risk more than 1-2% of your capital on a single trade.
📌 Summary:
Pattern: Rising Wedge
Bias: Bearish (upon confirmed breakdown)
Entry: Break and close below lower wedge boundary
Target: 0.006865
Stop Loss: 0.007017
This setup presents a favorable risk-to-reward ratio and a technically sound opportunity to short JPY/USD, provided confirmation aligns with your trading plan.
Rising Wedge Formation:
The price has been moving within a narrowing upward channel (rising wedge), characterized by higher highs and higher lows. However, the upward momentum is weakening as buyers fail to make significant progress at each new high. This pattern typically leads to a bearish breakdown when the support trendline is breached.
Key Resistance Zone:
Price is struggling around the 0.006985 level, which aligns with previous highs and psychological resistance. This zone also coincides with the upper boundary of the wedge, reinforcing it as a strong supply area.
Bearish Signal Potential:
A breakdown below the wedge's lower trendline would signal a shift in market sentiment, as it indicates sellers are gaining control. Volume confirmation would strengthen this signal, especially if the breakout occurs on increased selling pressure.
🎯 Trade Setup:
Entry:
Watch for a clean and confirmed break below the wedge support line, ideally with a strong bearish candlestick (e.g., engulfing, marubozu) to validate the move.
Target:
The projected target is around 0.006865, derived by measuring the height of the wedge and projecting it downward from the breakout point. This target also aligns with a previous consolidation area, adding confluence to the setup.
Stop Loss:
A prudent stop loss can be placed slightly above the recent high at 0.007017, beyond the upper wedge boundary. This protects the trade from potential false breakouts or unexpected volatility.
🧠 Market Psychology Behind the Pattern:
Rising wedges often develop during uptrends as momentum fades. Although price continues to make higher highs, the rate of ascent slows, indicating that buyers are losing strength. When sellers step in and break the support, the market often reacts sharply, leading to swift moves downward as trapped buyers exit their positions.
⚠️ Risk Management and Considerations:
Always confirm the breakout with volume or supporting indicators (e.g., RSI divergence, MACD crossover).
Be cautious of false breakouts—wait for a retest of the broken support as new resistance if you prefer a conservative entry.
Adjust position sizing according to your risk tolerance and account size. Never risk more than 1-2% of your capital on a single trade.
📌 Summary:
Pattern: Rising Wedge
Bias: Bearish (upon confirmed breakdown)
Entry: Break and close below lower wedge boundary
Target: 0.006865
Stop Loss: 0.007017
This setup presents a favorable risk-to-reward ratio and a technically sound opportunity to short JPY/USD, provided confirmation aligns with your trading plan.
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.
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.