Yen Finishes a Great Week of a Great Month.

By Tomasz Wisniewski|

Published: April 23 2021, 13:24 GMT+0

Yen Finishes a Great Week of a Great Month.

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Yesterday, we talked about the Canadian Dollar and today, our hero will be Japanese Yen. JPY significantly weakened in 2021 but since the beginning of April, buyers are back in the game and pushing the Japanese currency higher.

In today’s analysis, I will focus on two instruments, where I can see the most promising technical situations – The USDJPY and the GBPJPY, both of which, beloved by traders all over the world.

Let’s start with the USDJPY, which is now finishing its third bearish week in a row. This negative sentiment, from a technical point of view, can be explained by the false breakout pattern (the yellow line on the chart) from the beginning of April.

As you can see, the price broke the upper line of the symmetric triangle and the major down trendline (the blue line on the chart) but failed to hold above. Buyers did not manage to continue the upswing and the price collapsed, coming back inside of the triangle. Usually, that is a very strong signal for a movement in the opposite direction and that is what we are witnessing right now. As long as we stay inside of the triangle, the sentiment is negative.

Let’s move on to our favorite volatile instrument – GBPJPY. Here, the situation is pretty similar, till the beginning of April, the Yen was heavily beaten and since the beginning of this month, the JPY is recovering. The familiar structure, which you can spot on the chart is the head and shoulders pattern.

What is promising here is that the neckline (the green line on the chart) was broken and already tested as a resistance. The test was positive for sellers as the price bounced from it and went lower. With all this, sentiment seems negative and the chances for a test of the major uptrend line (the black line on the chart) look promising. That gives us a great trade in terms of the risk to reward ratio, and that is what serious traders like the most!