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EUR/JPY has formed a Descending Triangle pattern on the 1D chart. The pattern has 65% quality and 71% magnitude in the 202-bar period.
The pattern started on the 31st of October, 2011, when the pair rebounded from 111.635 and after testing pattern's resistance levels at 111.444 on 21st of March, 2012, and at 101.638 on 21st of June, 2012, it has slowed down at 97.8 where the pair is currently trading. Patterns support band is at 96.342 and is set to intersect with the pattern's resistance band on 1st of August, 2012. Long traders, expecting significant positive developments in the Euro zone could, focus on the pattern's support band at 98.710. If the pair breaches this level next target could be set at the recent peek and the pattern's resistance test at 101.638.
Technical indicators on aggregate point at a bearish market development on the 1D, 1W and 1M time horizons indicating a strong possibility a pair will at least test pattern support level if will not break the pattern completely. The SWFX market sentiment, with clear majority of traders (70%) in sell side, supports the probability of such development as well. Short traders could focus on the pattern's support level at 96.342. If this level is breached, next target could be set at the recent low at 95.607.
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