Key Threshold Looms for the CHFJPY

In the spotlight of today’s technical analysis are two stalwarts of stability in the currency market: the Swiss Franc and the Japanese Yen. This pairing, often sought after in times of market uncertainty, is currently navigating through a prolonged phase of consolidation, captured within the confines of a symmetric triangle pattern, outlined by black lines on the chart.

The dynamics of this pair have been intriguing. Lately, the lower boundary of the triangle has been under repeated scrutiny. The defense of this support line has been notably resilient, as evidenced by the several attempts to breach it in November and December. Each of these attempts has been marked by the formation of long candle tails, highlighted in yellow, underscoring the intensity of the battle at these levels. The support is holding firm – for now.

At present, another foray towards these lower levels is unfolding. This ongoing test of the triangle’s support line is crucial. A breach here could potentially unlock a potent sell signal. So, how should traders approach this setup? A daily close beneath the black line would signal a compelling opportunity to initiate a short position. Conversely, the formation of another long candle tail might present a tempting buy signal. However, it’s important to note that a downside breakout would likely carry more conviction and reliability than a mere bounce, given the persistent selling pressure evident in recent sessions.

Source: https://www.axiory.com/analytics/technical-analysis/key-threshold-looms-for-the-chfjpy