USD/JPY Forming Short Term Congestion
The 15 minute USD/JPY has formed a Continuation Rectangle with a ceiling at 96.27 and a floor at 95.78. This is a short term time frame, but one that has defined the range of this pair since the Sunday open.
Whether this range results in a momentum break from an accumulation cycle or an "inside-the-range" set up from within a distribution cycle, the decision levels are the same. What will determine whether the play could be a breakout or exhaustion at these levels is the type of sideways movement on this timeframe. Notice that the Initial Trend is low and this is exactly what a rectangle pattern embodies: no trend.
The 240 minute timeframe has alerted a Continuation Channel Down but the extremely low Initial Trend warns of little to no existing trend within the pattern. In situations like this it is easy to see this low reading and then focus on the trendlines that could be decision levels. In this case -- with a downtrending pattern -- look to the downtrending green resistance line. A break of this line would represent a breakout and reversal of the prior downtrend.
Notice that the breakout would be at 96.84, about 50 pips above where the 15 minute rectangle would break out. This means the 15 minute would break and follow through to reach the decision level on the 240 minute. Building trades out from the smallest to the largest timeframes have the advantage of "mapping out" where the price has to travel to findtriggers on different charts.
Whether this range results in a momentum break from an accumulation cycle or an "inside-the-range" set up from within a distribution cycle, the decision levels are the same. What will determine whether the play could be a breakout or exhaustion at these levels is the type of sideways movement on this timeframe. Notice that the Initial Trend is low and this is exactly what a rectangle pattern embodies: no trend.
The 240 minute timeframe has alerted a Continuation Channel Down but the extremely low Initial Trend warns of little to no existing trend within the pattern. In situations like this it is easy to see this low reading and then focus on the trendlines that could be decision levels. In this case -- with a downtrending pattern -- look to the downtrending green resistance line. A break of this line would represent a breakout and reversal of the prior downtrend.
Notice that the breakout would be at 96.84, about 50 pips above where the 15 minute rectangle would break out. This means the 15 minute would break and follow through to reach the decision level on the 240 minute. Building trades out from the smallest to the largest timeframes have the advantage of "mapping out" where the price has to travel to findtriggers on different charts.
- 22 June |
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