The USD/JPY on both the daily and the weekly chart, was what I referred to as the ‘patience trade’, a concept that we all struggle with from time to time. Trading, in whatever timeframe is often one akin to fishing. To catch the big fish we have to be patient and wait, and for longer term forex traders in the USD/JPY that patience has now been rewarded. In previous posts I highlighted the pennant formation on the weekly chart, but this is the same pattern expanded on the daily chart with exactly the same annotation. The end of this phase of price action was marked with a volatile candle on the daily chart, before finally breaking away from the 98.00 region, where the pennant was concentrated. Since then, we have seen the bullish trend develop moving firmly beyond the 100.00 region and on to test the 103.50 area, before pulling back over the last two days.
Whilst the ultimate direction of the breakout was never certain, the likely move was always biased to the bullish side for the pair for a variety of reasons. Indeed, we may be developing a secondary phase of price congestion at this level, with the volume at price bar now building in this region. Volumes at the moment remain average, so there is nothing to suggest that this is the end of this move, just yet, and provided we see rising volume on any breakaway from this area, then bullish momentum looks set to continue for the pair into 2014. Hopefully, the pause point here, will not be as long as last time, but again, for newcomers to the party, patience is the key once again.
By Anna Coulling