A bullish Shark Pattern for USD/JPY on the hourly time frame may seem indicative of a bullish trend continuation, but may also turn out to be a bull trap. Price action was very interesting for USD/JPY this past week. After price broke above the upper resistance trend line it rallied to the 110.00 level where it ultimately met a lot of resistance. From there price retraced all the way down to reverse up again at some very key levels.
The first key level was the 109.25 level which is the bullish cross-over level of the 50 & 200SMA, where price found support. Next, the same level was the trend line cross-over level of the upper and lower trend lines, where price found support and reversed to upside again.
Seems to good to be true? Well unfortunately, yes. A quick glance at the RSI reveals massive divergence, and not only that, the RSI is struggling to reach the 50 level, thus, further evidence that price may be limited to the 109.70/ 86 levels above where the downward sloping 50SMA is acting as resistance. In addition, the 10SMA (blue line) is also making lower lows and if price gets rejected at the 109.70/86 levels I suspect the next target then would be the 108.86/70 levels, where price closed above the 10SMA to commence the bullish rally of the past two weeks.
Therefore, trade with caution and check out my USD/JPY Bearish Alt Crab Pattern which I posted earlier this past week which reveals a potential bearish trend continuation.
Trade long (RvR ratio 2.63) Entry: Close above 10SMA or at market S/L: 109.14 T/P 1: 109.73/86 T/P 2: 110.27/40 As always,
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