EUR/JPY Technical Analysis – Falling Wedge Breakout with Bullish Continuation Setup
Chart: 30-Minute Timeframe
Date: May 5, 2025
Asset: Euro / Japanese Yen (EUR/JPY)
Chart Pattern: Falling Wedge + Breakout & Retest
🔍 1. Trend Context & Price Behavior
Prior to the pattern formation, EUR/JPY experienced a strong bullish rally, establishing a local high near 164.33. After this peak, the price began to retrace in a controlled manner, creating a series of lower highs and lower lows — a structure typical of a falling wedge pattern, which is generally considered a bullish continuation or reversal signal.
🧩 2. Chart Pattern Breakdown: Falling Wedge
The falling wedge is bounded by two downward-sloping trendlines that converge, signaling diminishing bearish momentum.
Price tested the lower wedge support multiple times, creating higher buying reactions — a sign of accumulating bullish pressure.
The resistance zone was previously established near 164.00–164.30, acting as a key level for profit-taking or reversal.
Upon breaking above the wedge’s upper boundary, the bullish breakout was confirmed, supported by increasing volume and strong candle closes.
🧱 3. Key Technical Zones
Zone Level Description
Resistance 164.330 Previous swing high and structure cap — main target
Support 162.437 Major support and stop-loss placement zone
Breakout Level ~163.25 Confirmation of wedge breakout
TP1 163.905 Intermediate take profit (minor resistance)
TP2 164.330 Full pattern target based on wedge height projection
🎯 4. Trade Setup Summary
Entry Idea: Long (Buy) on breakout and retest of wedge boundary near 163.25–163.30
Take Profit (TP1): 163.905 – aligns with minor horizontal resistance
Final Target (TP2): 164.330 – wedge height projection and previous swing high
Stop Loss (SL): 162.437 – below the final swing low and wedge support zone
📐 5. Risk-Reward Consideration
The Risk-to-Reward Ratio is favorable (~1:2.5 or higher depending on entry), with clear invalidation below support.
The pattern structure is clean and well-respected, improving confidence in trade validity.
🔄 6. Retest Behavior
After the breakout, price showed signs of a pullback to retest the previous resistance-turned-support level — a classic breakout confirmation signal. This retest often offers a second opportunity for safe entries with reduced risk.
📌 7. Market Sentiment & Price Action Psychology
Sellers exhausted near wedge support due to waning momentum.
Buyers regained control at breakout, reinforced by institutional accumulation behavior near support.
Bullish confirmation came via breakout candle and strong follow-through price action.
⚠️ 8. Risk Management Notes
Use a tight SL below recent swing low to preserve capital.
Avoid overleveraging — position sizing based on personal risk tolerance (typically 1–2% of trading capital).
Monitor for potential fakeouts — invalidation occurs if price closes back within wedge range.
✅ Conclusion
The EUR/JPY chart presents a technically sound bullish setup, backed by a well-formed Falling Wedge pattern and a clean breakout with retest. The setup targets the previous structural high at 164.330, offering a strong risk/reward profile. Traders should consider entering upon confirmation with disciplined risk management to maximize this opportunity.
Chart: 30-Minute Timeframe
Date: May 5, 2025
Asset: Euro / Japanese Yen (EUR/JPY)
Chart Pattern: Falling Wedge + Breakout & Retest
🔍 1. Trend Context & Price Behavior
Prior to the pattern formation, EUR/JPY experienced a strong bullish rally, establishing a local high near 164.33. After this peak, the price began to retrace in a controlled manner, creating a series of lower highs and lower lows — a structure typical of a falling wedge pattern, which is generally considered a bullish continuation or reversal signal.
🧩 2. Chart Pattern Breakdown: Falling Wedge
The falling wedge is bounded by two downward-sloping trendlines that converge, signaling diminishing bearish momentum.
Price tested the lower wedge support multiple times, creating higher buying reactions — a sign of accumulating bullish pressure.
The resistance zone was previously established near 164.00–164.30, acting as a key level for profit-taking or reversal.
Upon breaking above the wedge’s upper boundary, the bullish breakout was confirmed, supported by increasing volume and strong candle closes.
🧱 3. Key Technical Zones
Zone Level Description
Resistance 164.330 Previous swing high and structure cap — main target
Support 162.437 Major support and stop-loss placement zone
Breakout Level ~163.25 Confirmation of wedge breakout
TP1 163.905 Intermediate take profit (minor resistance)
TP2 164.330 Full pattern target based on wedge height projection
🎯 4. Trade Setup Summary
Entry Idea: Long (Buy) on breakout and retest of wedge boundary near 163.25–163.30
Take Profit (TP1): 163.905 – aligns with minor horizontal resistance
Final Target (TP2): 164.330 – wedge height projection and previous swing high
Stop Loss (SL): 162.437 – below the final swing low and wedge support zone
📐 5. Risk-Reward Consideration
The Risk-to-Reward Ratio is favorable (~1:2.5 or higher depending on entry), with clear invalidation below support.
The pattern structure is clean and well-respected, improving confidence in trade validity.
🔄 6. Retest Behavior
After the breakout, price showed signs of a pullback to retest the previous resistance-turned-support level — a classic breakout confirmation signal. This retest often offers a second opportunity for safe entries with reduced risk.
📌 7. Market Sentiment & Price Action Psychology
Sellers exhausted near wedge support due to waning momentum.
Buyers regained control at breakout, reinforced by institutional accumulation behavior near support.
Bullish confirmation came via breakout candle and strong follow-through price action.
⚠️ 8. Risk Management Notes
Use a tight SL below recent swing low to preserve capital.
Avoid overleveraging — position sizing based on personal risk tolerance (typically 1–2% of trading capital).
Monitor for potential fakeouts — invalidation occurs if price closes back within wedge range.
✅ Conclusion
The EUR/JPY chart presents a technically sound bullish setup, backed by a well-formed Falling Wedge pattern and a clean breakout with retest. The setup targets the previous structural high at 164.330, offering a strong risk/reward profile. Traders should consider entering upon confirmation with disciplined risk management to maximize this opportunity.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.