EUR/JPY 1H: Bullish Falling Wedge Breakout + Target 🧠 Overview of the Setup
The EUR/JPY currency pair has recently completed a Falling Wedge pattern, a classic and powerful bullish reversal formation. This chart structure typically signals the end of a downtrend and the potential beginning of a strong upward impulse.
In this setup, multiple confluences point toward a bullish move, including pattern breakout, structure shift, retest of a dynamic support level, and alignment with major supply/resistance zones.
🔍 Pattern Analysis: Falling Wedge
Definition: A falling wedge is a technical pattern formed by two downward-sloping trendlines — one representing resistance and the other support — that converge. It signals a slowdown in bearish momentum, often preceding a bullish reversal.
Chart Observation: The wedge is well-defined, spanning several trading sessions. As price action tightened toward the apex, bearish momentum began to weaken.
Breakout Trigger: Price broke convincingly above the upper wedge boundary, suggesting the start of a bullish reversal.
✅ Implication: The breakout confirms that buyers have taken control, especially as this move is supported by a structural Change of Character (CHOCH).
📈 Price Action Structure & Key Zones
1. Minor Resistance (Broken)
After the breakout, price encountered a minor resistance zone just above the wedge. This area is now likely to flip into support (a classic breakout retest).
2. Major CHOCH (Change of Character)
A CHOCH indicates a break in market structure — from lower highs and lower lows to higher highs and higher lows.
The break above this level confirms a shift from bearish to bullish sentiment.
3. Curved Support (Black Min Curve)
A rising curved trendline has formed below current price, acting as a parabolic support structure.
This suggests not just a trend reversal, but increasing bullish momentum, as buyers step in at higher levels with each correction.
4. Major Resistance Zone (Target Area)
Price Target: ~164.50 – 165.50
This zone has historically acted as strong supply and is marked for potential take-profit or observation for reversal signals.
The target is derived from both horizontal resistance and the projected height of the wedge pattern.
🎯 Trading Strategy
Component Details
Entry Zone 162.50 – 162.60 (retest of minor resistance + curve support)
Stop Loss Below 162.00 (beneath wedge and curve)
Take Profit 164.50 – 165.50 (major resistance)
Risk/Reward Approx. 1:2.5 to 1:3
🔸 Conservative Entry: Wait for bullish confirmation (bullish engulfing candle or pin bar) on the support retest.
🔸 Aggressive Entry: Market buy after confirmation of curve bounce or on lower timeframe bullish signals.
📊 Volume & Momentum Consideration
Although volume isn’t shown on this chart, volume confirmation on the breakout would significantly strengthen the bullish bias. Look for:
Increasing buy volume on breakout
Lower sell volume on pullbacks
Bullish divergence (if using RSI or MACD)
⚠️ Risk Management & Event Awareness
Be cautious of unexpected JPY-related economic releases (e.g., BOJ announcements, inflation data) that may cause volatility.
If the curved support is broken decisively, this could invalidate the setup, suggesting further consolidation or downside risk.
🧠 Psychological Perspective
The Falling Wedge reflects a market where sellers are gradually losing control — pushing price lower, but with less conviction. As the wedge tightens, bulls prepare to step in. The breakout confirms that sentiment has shifted, and many traders use such setups as entry points for swing or momentum trades.
The curved support line suggests a transition from accumulation to markup phase, which typically leads to faster price expansion as confidence in the uptrend grows.
✅ Summary
✅ Pattern: Falling Wedge (Bullish)
✅ Breakout: Confirmed with CHOCH
✅ Support: Curve trendline acting as dynamic support
✅ Target: 164.50 – 165.50 major resistance
✅ Bias: Bullish (until curve support is broken)
📣 Final Thoughts
This is a high-probability bullish continuation setup backed by price structure, pattern breakout, and support alignment. The risk is well-defined, and reward potential is strong — making this a favorable setup for swing traders or short-term position traders.
💬 Let me know what you think in the comments — are you going long EUR/JPY?
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