USD/JPY Price Prediction: Falling within possible bearish Broadening Formation
|- USD/JPY is declining within a potential bearish reversal pattern.
- Called a “Broadening Formation” such a pattern would have downside implications for price.
USD/JPY looks like it is falling within an evolving bearish Broadening Formation price pattern (see chart below).
If this is the case, then the pair is likely to eventually decline towards the lower boundary line of the pattern at around 151.50. After that, it could even break below that line and decline to the projected target for the actual Broadening Formation (BF) itself, at around 148.54.
USD/JPY Daily Chart
The (blue) Moving Average Convergence Divergence (MACD) is moving lower after crossing below the red signal line – a bearish indication.
USD/JPY overshot the upper boundary line of the BF on November 14 before quickly falling back down inside it on the following day. This could was probably a sign of exhaustion and is a sign of a coming reversal on the horizon.
That said, it is also possible the pattern could be false. If so, USD/JPY would still be in a strong medium-term uptrend, and given the technical analysis principle that “the trend is your friend” the odds would favor more upside.
In such a case, a break above 156.25 would likely confirm further gains towards a target at around 157.86 (July 19 high).
Another possibility is that the major trendline could provide support for price in the 152.90s, slowing its decline to the lower boundary line of the BF.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.