Since the month of December last year a bear market ensued on the Euro versus the Japanese Yen which is clearly seen by the descending price channel that has formed since then. Price has respected the resistance and support levels of the channel to the tee. Safe to say that the main trend is a downtrend. Last week’s candlestick was bearish closing off at the support level.
While the market is trading within the channel we should be patiently waiting for a breakout and follow price in that direction. The breakout may happen on either side of the channel therefore let’s be vigilant and avoid getting caught up in predicting the market movements before the breakout happens.
Examining the weekly chart of the British dollar versus the New Zealand dollar which has been on an uptrend for the past 10 months, we can see that the trend up has entered a new phase. An ascending triangle formed which broke out above the pattern. A breakout on the upside of a pattern within an uptrend is a strong signal as it’s in line with the current trend.
In addition to the breakout we also have a weekly confirmation candle. The resistance of the pattern also coincides with a major level. Therefore we have a breakout out of a major level as well as a chart pattern. That’s an example of a trading confluence. As further price action guides us on the bull market, watch for the ideal areas to join the trend in case you missed an earlier entry.
Disclaimer: This analysis is for educational and general information only and not advice or a recommendation to trade or invest. Do your own research/analysis and don’t blindly enter trades based on the analysis.