This currency pair has been in consolidation mode for quite some time, but it looks ready to make a breakout from its triangle pattern pretty soon.
Which way can it go?
Better keep these inflection points on your radar!
CHF/JPY 4-hour Forex Chart by TradingView
Market uncertainty from global trade concerns have been propping up safe-haven currencies like the Swiss franc and Japanese yen lately, although the latter has drawn additional support from a hawkish Bank of Japan.
Recall that the BOJ recently started its tightening cycle, and remarks from policymakers appear to be hinting at even more interest rate hikes down the line.
Can this mean a bearish break for CHF/JPY?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the Japanese yen and Swiss franc, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
As you can see on the 4-hour chart above, the pair has formed lower highs and found support at the 166.00 major psychological level, creating a descending triangle pattern that’s been holding since last month.
The consolidation has gotten much tighter since, suggesting that breakout pressure is building up. Keep your eyes peeled for long red candlesticks closing below the triangle bottom and S1 (165.89) that could start a downtrend that’s the same height as the formation, dragging CHF/JPY to next bearish targets at S2 (165.02) then S3 (164.17).
On the other hand, bullish candlestick patterns breaking above the triangle top, the 100 SMA dynamic resistance, and R1 (167.61) could point to a longer-term climb that could lift the pair to R2 (168.46) then R3 (169.33) near the 200 SMA dynamic inflection point.
As always, watch out for other top-tier catalysts that could impact overall market sentiment, and make sure you practice proper position sizing when taking any trades!
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