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(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
Price action on USD/JPY, a daily chart of which is shown, is currently on the verge of a bearish breakdown below a newly formed symmetrical triangle consolidation pattern. This occurs in an overall environment of USD/JPY bearishness within the context of a general downtrend that has been in place since April.
Within this downtrend, price has broken down below several bullish corrections and pattern consolidations, as shown on the chart. The current triangle could be the next bearish continuation pattern. If a strong breakdown indeed occurs, the next reasonable support target to the downside resides around the 88.00 price region.
Further to the downside is another key support target in the 87.00 price region, which represents support from the long-term double-bottom low that occurred in the beginning of the year.
By James Chen, Chief Technical Analyst, FX Solutions
