EUR:JPY – Wedge

The current rally in EUR: JPY has the potential to be the 5th and final swing in a large rising wedge formation.

The height of this formation provides reward: risk scope for swing traders to sell if there is another rejection of the wedge resistance.

The blue trend lines on the 4 hour chart below form the wedge formation i.e. rising but converging lines.

The classic wedge formation consists of 5 swings. This chart will tick the box if the current rally stops at the blue resistance line again.

In this situation, one approach to trading strategy is to short if there is another peak at the trend line. A standard approach to the initial stop loss would be just above the final peak at the trend line.

The dashed support line at the bottom of the wedge could be used as an initial profit objective. This could be modified depending on the structure of any downtrend that began at the top of the wedge.

EUR: JPY CFD – 4 Hour. Source: CMC Tracker

Regards

Ric

About Ric Spooner

Over 30 years market experience - professional trader, broker, director
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2 Responses to EUR:JPY – Wedge

  1. dv34 says:

    I like it Ric, but on my charts it looks more like a channel..? I personally think the JPYs have a tendency to overshoot a bit and I would really like to short around 98.93, (stop 99.12) as a blow out the top of the channel to take out short stops and then target 2x levels down to 96.67 the bottom of the channel…. (I am wary taking any long term EURJPY shorts as the monthly also has a wedge and is at the bottom of it!!

  2. dv34 says:

    Also AUDUSD looks like 4hour H&Shoulders breaking right now and weekly 3 river evening star – it’s looking very very very bearish – in line with fundamentals,
    I have been loving this pair this last week – currently got 3 risk-free shorts already with T1s already hit and looking to get in short again after a short term long trade from 1.0403 stop 1.0379 t1 1.0465 (hopefully!) getting ready for the ‘mother of shorts’ next week… (please excuse my french…)

    Technically I think the monthly has broken trend line and retesting from below (triangle)/ weekly has evening star formation/ daily has wedge breaking/ 4hour head and shoulders…!! doesn’t get any more technically clear than this on higher time frames – which is very very rare….

    I am shorting aggressively and most of my profits will be taken around 1.0405 and 1.0225 I will hold a small position open short till 0.9750 which is a good 615 pips away, hopefully with less than 20-30pips risk… if it gets there.

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