Monday, October 5, 2015

USDJPY: Tracing out a large symmetrical triangle – BBH

FXStreet (Delhi) – Research Team at BBH, note that since late-August the dollar has been tracing out a large symmetrical triangle pattern against the yen. About three-quarters of the time, this pattern is a continuation pattern but in the current context, this means a downside break for the dollar.

Key Quotes

“The other point that needs to be made is that this pattern is subject to false breaks. And that is precisely what has happened on the past two Friday's. On September 25, the dollar broke to the upside on an intraday basis only to close back within the triangle pattern. This past Friday, the employment shock saw the dollar break to the downside only to recovery back within it. The parameters of the pattern begin the new week around JPY120.75 and JPY119.40. At the end of next week, they are close to JPY120.60 and JPY119.60.”

“We do recognize that the triangle pattern can be resolved by neither breaking higher or lower, but continuing to move sideways through the apex of the pattern. We often experience the yen as a range bound currency, and when it looks like it is trending, it is moving from one range to another. In this scenario, the price after the US jobs data reaffirmed the importance of the JPY118.60 support area.”
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