USD/JPY Trade Setup – Falling Wedge Breakout Indicates Bullish Reversal
Timeframe: 45-Minute Chart
Instrument: USD/JPY (U.S. Dollar / Japanese Yen)
Pattern: Falling Wedge
Trend Bias: Bullish (Reversal Setup)
🧠 Chart Pattern Analysis: Falling Wedge
The chart depicts a well-formed Falling Wedge pattern — a classical bullish reversal signal typically forming after a downtrend. This pattern is characterized by:
Converging downward sloping trendlines with lower highs and lower lows.
Decreasing volatility as the pattern develops, indicating exhaustion in bearish momentum.
A breakout near the end of the wedge (which has occurred), often followed by a sharp bullish move.
This wedge followed a sharp upward rally, which suggests it's likely a bullish continuation pattern after a flag-like correction. The falling wedge acts as a consolidation phase before the next upward leg.
🔍 Key Levels & Zones
🔸 Support Zone – 142.557
This level marks the lower bound of the wedge.
A major demand area, which served as the base for the current bullish impulse.
Also acts as a logical stop-loss (SL) area for risk management.
🔸 Resistance Zone – 145.104 (TP1)
The first take-profit (TP) level.
This is a previously respected resistance level just before the recent wedge structure began forming.
A break and retest above this level would confirm bullish strength.
🔸 Final Target – 145.885 (TP2)
The final projected target after the breakout.
Matches the previous swing high from early May.
This level represents full wedge projection and trend continuation.
📈 Price Action Behavior
Price climbed aggressively up to ~146 before entering a consolidation phase.
The pair formed lower highs and lower lows, constructing a clean wedge.
The breakout from the wedge is confirmed with bullish momentum and strong bullish candle.
Price is now trading slightly above the upper boundary of the wedge, suggesting early entry positioning is possible.
📌 Trade Plan Summary
Element Description
Entry Zone On breakout above wedge (~143.70–143.90)
Stop-Loss Below support at 142.557
Take-Profit 1 145.104 – Near-term resistance
Take-Profit 2 145.885 – Major breakout target
📉 Risk Management
Risk-Reward Ratio: Favorable (~1:2 or higher).
Position sizing should reflect total risk tolerance.
Avoid entry without confirming the breakout with a candle close above wedge resistance.
Be aware of fundamental catalysts (U.S. interest rates, BoJ statements, NFP, CPI) which may impact the yen or dollar sharply.
📘 Conclusion
The USD/JPY 45-minute chart shows a clear bullish opportunity following a confirmed Falling Wedge breakout. With support holding firm and bullish momentum returning, there’s a solid technical case for a move toward 145.10 and 145.88. Traders should monitor for sustained movement above the wedge and manage risk carefully with the 142.55 stop level.
Timeframe: 45-Minute Chart
Instrument: USD/JPY (U.S. Dollar / Japanese Yen)
Pattern: Falling Wedge
Trend Bias: Bullish (Reversal Setup)
🧠 Chart Pattern Analysis: Falling Wedge
The chart depicts a well-formed Falling Wedge pattern — a classical bullish reversal signal typically forming after a downtrend. This pattern is characterized by:
Converging downward sloping trendlines with lower highs and lower lows.
Decreasing volatility as the pattern develops, indicating exhaustion in bearish momentum.
A breakout near the end of the wedge (which has occurred), often followed by a sharp bullish move.
This wedge followed a sharp upward rally, which suggests it's likely a bullish continuation pattern after a flag-like correction. The falling wedge acts as a consolidation phase before the next upward leg.
🔍 Key Levels & Zones
🔸 Support Zone – 142.557
This level marks the lower bound of the wedge.
A major demand area, which served as the base for the current bullish impulse.
Also acts as a logical stop-loss (SL) area for risk management.
🔸 Resistance Zone – 145.104 (TP1)
The first take-profit (TP) level.
This is a previously respected resistance level just before the recent wedge structure began forming.
A break and retest above this level would confirm bullish strength.
🔸 Final Target – 145.885 (TP2)
The final projected target after the breakout.
Matches the previous swing high from early May.
This level represents full wedge projection and trend continuation.
📈 Price Action Behavior
Price climbed aggressively up to ~146 before entering a consolidation phase.
The pair formed lower highs and lower lows, constructing a clean wedge.
The breakout from the wedge is confirmed with bullish momentum and strong bullish candle.
Price is now trading slightly above the upper boundary of the wedge, suggesting early entry positioning is possible.
📌 Trade Plan Summary
Element Description
Entry Zone On breakout above wedge (~143.70–143.90)
Stop-Loss Below support at 142.557
Take-Profit 1 145.104 – Near-term resistance
Take-Profit 2 145.885 – Major breakout target
📉 Risk Management
Risk-Reward Ratio: Favorable (~1:2 or higher).
Position sizing should reflect total risk tolerance.
Avoid entry without confirming the breakout with a candle close above wedge resistance.
Be aware of fundamental catalysts (U.S. interest rates, BoJ statements, NFP, CPI) which may impact the yen or dollar sharply.
📘 Conclusion
The USD/JPY 45-minute chart shows a clear bullish opportunity following a confirmed Falling Wedge breakout. With support holding firm and bullish momentum returning, there’s a solid technical case for a move toward 145.10 and 145.88. Traders should monitor for sustained movement above the wedge and manage risk carefully with the 142.55 stop level.
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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.