Overview of the Chart:
The Japanese Yen (JPY) against the U.S. Dollar (USD) 1-hour chart showcases a well-defined market structure, transitioning from a downtrend within a falling channel to a breakout with bullish momentum. The chart highlights critical support and resistance levels, a confirmed breakout, and a forecasted price movement that could indicate further bullish continuation.
This analysis will break down the chart patterns, technical indicators, and potential trade setups, providing a professional outlook on price action behavior.
Technical Breakdown of the Chart
1. Falling Channel Pattern – Downtrend Phase
The price had been trading within a descending channel, marked by two parallel trendlines (blue lines), indicating a controlled downtrend.
A falling channel is a bullish reversal pattern, as it signals that bearish momentum is weakening.
Within the channel, price action consistently created lower highs and lower lows, adhering to the structure of the pattern.
The red dashed trendline inside the channel acted as a dynamic resistance, rejecting price movements multiple times before the breakout.
📌 Key Observation: The falling channel pattern suggests accumulation, where selling pressure gradually diminishes, paving the way for a bullish reversal.
2. Support Zone & Bullish Breakout
The price eventually reached a strong horizontal support level (highlighted blue zone at the bottom), which acted as a critical demand area.
This support level had previously led to strong rebounds, making it a significant zone for potential reversals.
Bullish breakout confirmation:
A strong bullish candle closed above the upper boundary of the channel, breaking the trendline resistance.
The breakout suggests a shift in market structure from a downtrend to an uptrend, as buyers regained control.
The price has now moved above the previous resistance, confirming the bullish momentum.
📌 Key Takeaway: The breakout is a strong signal that sellers have lost control, and a potential bullish trend could emerge.
3. Resistance Zone – Key Barrier for Buyers
The next area of interest is the resistance level (highlighted in a blue rectangular zone).
This level has historically acted as a strong supply zone, where price previously struggled to break through.
If the price manages to sustain above this level, it would confirm bullish continuation toward higher price targets.
📌 Technical View: If buyers break past this resistance, it could lead to a strong bullish rally, reinforcing the new uptrend.
4. Target Projection & Forecasted Price Movement
The chart outlines a forecasted bullish path using a zigzag projection (black lines). Here’s the expected price action:
Short-Term Movement:
Price might face temporary resistance near the blue resistance zone.
A minor pullback or consolidation in this area is expected before further movement.
Retest of Support:
If price pulls back, it could retest the broken channel resistance or the support zone.
A successful retest and bounce would validate the strength of the breakout.
Bullish Continuation:
If the resistance zone is broken, price is likely to continue toward the target level of 0.006842, a previous swing high.
This level acts as the final upside target based on historical resistance levels.
📌 Key Insight: The market structure suggests that price will follow a higher-high, higher-low pattern, which is characteristic of an uptrend.
The Japanese Yen (JPY) against the U.S. Dollar (USD) 1-hour chart showcases a well-defined market structure, transitioning from a downtrend within a falling channel to a breakout with bullish momentum. The chart highlights critical support and resistance levels, a confirmed breakout, and a forecasted price movement that could indicate further bullish continuation.
This analysis will break down the chart patterns, technical indicators, and potential trade setups, providing a professional outlook on price action behavior.
Technical Breakdown of the Chart
1. Falling Channel Pattern – Downtrend Phase
The price had been trading within a descending channel, marked by two parallel trendlines (blue lines), indicating a controlled downtrend.
A falling channel is a bullish reversal pattern, as it signals that bearish momentum is weakening.
Within the channel, price action consistently created lower highs and lower lows, adhering to the structure of the pattern.
The red dashed trendline inside the channel acted as a dynamic resistance, rejecting price movements multiple times before the breakout.
📌 Key Observation: The falling channel pattern suggests accumulation, where selling pressure gradually diminishes, paving the way for a bullish reversal.
2. Support Zone & Bullish Breakout
The price eventually reached a strong horizontal support level (highlighted blue zone at the bottom), which acted as a critical demand area.
This support level had previously led to strong rebounds, making it a significant zone for potential reversals.
Bullish breakout confirmation:
A strong bullish candle closed above the upper boundary of the channel, breaking the trendline resistance.
The breakout suggests a shift in market structure from a downtrend to an uptrend, as buyers regained control.
The price has now moved above the previous resistance, confirming the bullish momentum.
📌 Key Takeaway: The breakout is a strong signal that sellers have lost control, and a potential bullish trend could emerge.
3. Resistance Zone – Key Barrier for Buyers
The next area of interest is the resistance level (highlighted in a blue rectangular zone).
This level has historically acted as a strong supply zone, where price previously struggled to break through.
If the price manages to sustain above this level, it would confirm bullish continuation toward higher price targets.
📌 Technical View: If buyers break past this resistance, it could lead to a strong bullish rally, reinforcing the new uptrend.
4. Target Projection & Forecasted Price Movement
The chart outlines a forecasted bullish path using a zigzag projection (black lines). Here’s the expected price action:
Short-Term Movement:
Price might face temporary resistance near the blue resistance zone.
A minor pullback or consolidation in this area is expected before further movement.
Retest of Support:
If price pulls back, it could retest the broken channel resistance or the support zone.
A successful retest and bounce would validate the strength of the breakout.
Bullish Continuation:
If the resistance zone is broken, price is likely to continue toward the target level of 0.006842, a previous swing high.
This level acts as the final upside target based on historical resistance levels.
📌 Key Insight: The market structure suggests that price will follow a higher-high, higher-low pattern, which is characteristic of an uptrend.
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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.