USD/JPY: Trend?
Looking back at last year and reviewing the Monthly Chart above I've realised that I may have been looking out for complex answers when actually the answers were relatively simple in Technical Analysis terms. We have established since 2015 a Downtrend (currently 113.99) and we have also established since 2016 an Uptrend (currently 109.63). These have led to a Symmetrical Triangle pattern as can be seen above on the Monthly Chart above. Moreover, we are coming to the end of this pattern and as a result we are showing some signs of indecision with a Key Reversal Up followed two months later by a KR Down in recent times. Typically a ST will head in the direction of the original move...in this case upwards.
However, as we have come so far along the Triangle the chances of a false break are high, we may even have that rare thing - a double false break - but it is too early to contemplate that. We are hanging around the 50% Fib of the recent year's move at 112.51 and that is also another indicator of a move likely to happen...but also indecision as to which way. I am tempted to suggest a try higher again in the next few months as the KR Down in Nov has not followed through in Dec. Please note, STs can also become a type of Halfway Hesitation Pattern in which case we could see the start of a significant move over the next few years up to the 150 level...though this is taking things too far just yet as after all, we haven't even broken out of the ST. Nevertheless, early Q2 we ought to see a move in one or other direction.
I'll add these two final points, if we do try higher then the action mid 2016-to-date could also be another pattern within a pattern - a Bull Flag. I've marked an 'X' just under the 2015 high at 126.00 area as a potential for such a move. Then there's the 5 Year MA (currently 109.33). Though not perfect, it has been as good indicator of underlying support & trend up for the market as has been evidenced with its close parallel behaviour to the 2016-to-date Uptrend. Despite three MAs pointing down and one up, I'm minded to push the bullet point into neutral just so we can see how the ST develops.
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