EUR/JPY Awaits Breakout: Ascending Triangle in Focus

By Tomasz Wisniewski|

Published: June 04 2024, 06:00 GMT+0

EUR/JPY Awaits Breakout: Ascending Triangle in Focus


In today’s analysis, I would like to draw your attention to the Euro to Japanese Yen (EUR/JPY), where a fascinating formation is developing. This week, we anticipate an interest rate decision from the Eurozone, with a potential rate cut on the horizon. Keep this fundamental backdrop in mind as we delve into the technicals.

From a technical perspective, EUR/JPY is forming an ascending triangle, a bullish pattern typically suggesting a breakout to the upside. The price is consolidating below the orange horizontal resistance, just under 171, with dynamic support provided by both a black and a green trendline. As the price nears the apex of the triangle, the likelihood of a decisive move increases.

In theory, an ascending triangle formed in an uptrend implies a higher probability of an upside breakout. A confirmed breakout, with the price closing above the orange resistance, would signal a strong buy opportunity. Conversely, a breakdown below both dynamic supports, indicated by a close below these trendlines, would be a bearish signal, suggesting a sell. Given the bullish nature of the pattern and the current uptrend, the odds favor a breakout to the upside. However, it’s crucial to wait for the market to confirm the direction.