Forex Trading Review: USD/JPY Symmetrical Triangle – May 19, 2014

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Forex Trading Review: USD/JPY Symmetrical Triangle - May 19, 2014

Forex Trading Review: USD/JPY Symmetrical Triangle - May 19, 2014

USD/JPY has been consolidating tighter and tighter inside a descending triangle chart pattern on its daily time frame. In this forex trading review, it suggests that sellers are trying to push the pair lower but that buyers just won’t let up.

A break in either direction could last by as much as 400 pips, as the chart pattern spans from the peak around 105.00 to the support just above the 101.00 major psychological level.

A quick forex trading review of the pair shows that it is just testing the bottom of the triangle and might be due for a quick bounce back to the top around the 102.50 minor psychological resistance. This pair could be in for more volatility or a clearer direction as the BOJ is set to make its monetary policy decision this week while the FOMC will release the minutes of its latest policy meeting. Using a straddle setup for this swing trade idea might work, with a buy order above the 102.50 handle and a sell order below 101.00.

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USD/JPY Forex Trading Review

In terms of monetary policy bias, a fundamental forex trading review of the US dollar and the Japanese yen would show that the yen is more likely to weaken. After all, the Fed is already on track with its taper time frame and is moving closer to actually tightening monetary policy. The BOJ, on the other hand, is keeping the door open for further easing.

Recall that the Japanese government recently implemented a sales tax hike. This effectively drives prices higher but could lead to weaker spending. In turn, this could weigh on overall growth and undo some of the progress made by Japan when it comes to reviving economic performance.

To contact the reporter of the story: Marco Roemer at marco@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.