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Current Trade Setup: Short EUR/JPY
A broadening formation looks confirmed today on the EUR/JPY daily candles. A broadening formation usually comes after a trend as a period of increasing price volatility (higher highs & lower lows.) The pattern usually indicates a lack of investor confidence and accelerating panic. You can see the characteristic mega-phone appearance of the pattern in chart #1 below. This may sound like a stretch to say that there is trader uncertainty building up in the EUR/JPY - just kidding. I suspect that there are a lot of traders at this level not sleeping well at night wondering if they should take some profits. From a technical perspective, I don't think there could be a better time to liquidate long positions and start looking for some potential shorts. Candlestick analysts (myself included) will often look for a doji at the pattern's resistance line as a good trading signal that the market has run out of steam and is likely to start eating long stops. Such a trading signal occurred today (if your end of market is near 0:00 GMT you can probably see the same thing.) If the market does breakout to the downside I would set a target range of the bottom of the current pattern and the top of the double bottom from late February. You can see that detailed in chart #2. For more info on chart patterns, check out the forex essentials course at PFX. [url]http://www.pfxglobal.com/free-online-forex-currency-trading-education-courses-videos-lessons-forum.html[/url] Chart #1 [IMG]http://www.pfxglobal.com/images/stories/technicals/07172008eurjpya.png[/IMG] Chart #2 [IMG]http://www.pfxglobal.com/images/stories/technicals/07172008eurjpyb.png[/IMG] Hemadri Singh Technical Strategy Blogger - PFXglobal
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