EURO JPY- 300-PIP RALLY IN A FEW DAYS
The EURO JPY looks to be about to form the Support boundary of a very large Pennant on the Daily Chart. After ending a very long Uptrend and breaking the Inner Uptrend Line, it has been gradually moving sideways towards the Outer Uptrend Line. We also see what appears to be the start of a Double Bottom formation. If there is a bullish move that breaks the current Downtrend Line, then a rally to the Resistance of this Pennant could take place towards the end of this month.
The chart below shows the Inner and Uptrend Lines of the major Uptrend. The end of long trends usually leads to the break of the Inner Trend Line and a gradual drift towards the Outer Trend Line.
From here, the currency could continue to move sideways until it breaks the Outer Uptrend Line to start a Downtrend or rally to continue the main Uptrend. As it moves sideways to reflect the low trading activity across the Forex market, it could rally in the short-term to complete the formation of a large Pennant. The Resistance has already been formed and is now ´awaiting` the 2nd Support price point.
This rally could start with a break of the Downtrend Line that would also complete a pair of Double Bottoms. This would be enough of a signal to justify trading long towards Resistance, a little less than 300 Pips away.
If these Double Bottoms are formed with a strong Bull Candle to break the Downtrend Line, entry can take place either immediately or with a follow-up signal on the 4 Hour Chart. This, of course, will depend on the patterns we see on both time frames relative to the rules established for trading these setups.
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