Standby for a dollar-yen rebound rally

The triangle chart pattern has three elements.

The first is the support/resistance level. This is near 101 on the weekly dollar-yen chart.

The second is the upward sloping trend line that defines the lower edge of the chart pattern. This starts from the low of 92.6 in April 2013, and uses the lows in June 2013 and the two lows in October 2013 to set the position of the uptrend line. A fall below this line would signal the end of the pattern and the end of the uptrend that started in February 2012.

(Read more: How bad will the Nikkei meltdown get?)

The third, and an essential element that completes the pattern, is the base line. This is created by 1 to 5 candles of price activity moving in the same direction. The dollar-yen chart uses six candles, five of which are green. This is the base of the triangle. Its height is measured, and this value is projected above the support/resistance level to give a projected upside pattern target near 110.

There is a high probability the 110 target will be achieved. Note, the dollar-yen may fall as low as 100 – the value of the uptrend line – and still remain consistent with the development of this chart pattern.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders – www.guppytraders.com. He is a regular guest on CNBCAsia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.

Source Article from http://www.cnbc.com/id/101441800?__source=yahoonews&par=yahoonews
Standby for a dollar-yen rebound rally
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