On 20th January, prior to my favorite trading session, 2 chart patterns can be identified but both of them does not shown a true textbook moves.(refer to the 5 MTF above). Earlier, a descending triangle was detected with a lower horizontal support line and upper diagonal resistance line. A breakout occurred at 6:05 (5:05 GMT) can be interpreted as a breakout from the triangle with a textbook move for a retracement to the horizontal support line and then a continuation of the downtrend. Instead of moving down, the retracement moved passed the diagonal resistance line.
At this stage, I could say that there is failure of the ascending triangle pattern and a possibility of a falling wedge pattern.
A falling wedge or declining wedge, is a formation which has a strong bullish bias. They can be trend continuation pattern, if preceded by an uptrend or can be trend reversal pattern, if preceded by a downtrend.
In this case, it should be a trend reversal as EURJPY has been on the downtrend. With price had already penetrate the upper resistance line, EURJPY is expected to retrace the w edge before continuation of upward moves. It touched the 60 EMA and reversed to retraced to the wedge. It touched the diagonal resistance line, but instead of rebounding upward, EURJPY moved lower bypassing the lower support line of the wedge. Therefore indicating a wedge pattern failure.
Looking a the Prices moved with a lower high and lower low, with 60 EMA acted as resistance level and prices is well below the 200 EMA, we could see that the trend is still downward.
The downtrend is within the descending channel (the two descending orange lines). Anyway my trade is a scalp trade. With the confusion of identifying the patterns, I still managedto earned my 50 pips target trading from 6:00GMT to 9:00 GMT. I will showed the trade in the next session.
