Currency
by Alex Davies on December 5, 2018

USDJPY Analysis – broken neckline leads to more decline

Last we touched upon USDJPY about a month ago when we took a positive stance on the currency pair and expected it to rise in the future. There was a typical market movement and a sharp spike breaking the resistances which changed our stance to a positive one and triggered a buy signal. In the mid-term, our analysis thus turned out to be right. The price increased over 100 pips in under 2 weeks and then bounced from the upper line of the triangle formation. After the reversal, it declined further and bounced back one more time to go up again.

USDJPY Analysis - broken neckline leads to more decline

The price tested the resistance one more time and ended up the same way i.e bouncing back and dropping. These movements have traced out a head and shoulders pattern. The technical analysis suggests a negative movement in such a case. As the price already broke the neckline shown in red on the graph above, the signal is on and we expect to see a further drop in price in the nearest future. This time, the price will be aiming for the lower line of the symmetric triangle pattern. We are taking a negative stance on the movements and expect more decline to occur in the future.

 

By Alex Davies

Alex Davies is a long-time trader with a background in statistical analysis. Davies has worked as a financial analyst since 2014 and has been writing technical analyses for various publications since 2015. Davies writes on different financial instruments including stocks, cryptocurrencies and currency pairs.

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