Symmetrical Triangle in CAD/JPY
By: Mike Kulej
The CAD/JPY pair has been in a sideways mode for the last few weeks. All of the price action has been contained within 81.70 – 86.40 range established in early July. Since then, the price swings have become smaller, as if looking for direction or waiting for an event which would push this pair either way.
These contracting moves are creating a symmetrical triangle, as visible on an intermediate term chart. On Friday the CAD/JPY hit the bottom of this triangle, making the pattern easier to see and more convincing. Considering that the triangle has been under construction for some time now, we can expect a more decisive move soon. As a rule, this pattern does not indicate the direction of a breakout. However, since the trend prior to this formation had been down, there is a slight bearish bias.
The eventual movement, either up or down, could be of good size. For a bearish breakout, the price should reach 86.40, the latest important resistance. On the down side, major support at 81.70 provides a likely objective. Both of these scenarios present good trading opportunities.