A position LONG should have been established around the 95.80 level. Some 30-40 pips SL would be a safe bet projecting the break towards the upside as the main diagonalof the formation is pointing down and therefore a break up was indeed to be expected.
The projected target to the upside is 108.85.
Levels for this trade that took place on August 8th 2013:
SL: 95.45
Buy: 95.85
TP: 108.85
Trailing stops already triggered.
If one was unable to catch the bottom of the formation, there was a chance to assume a LONG position last Tuesday (09.03.2013) and leave the position open 'betting' on USD strength due to the range breakout. Very conservative stops on this one.
Levels for this trade:
SL: 99.13
Entry: 99.32
TP 1: 100.00
TP 2: 108.85
Trade @ BE currently and partial close triggered @ 100.00.
Daily Chart Showing a Diamond Formation
A side note on this is that retail NET SHORT positions on USDJPY and crosses (YEN LONG) have surged by almost 150% since last week. Therefore, my contratrian view supports YEN weakness against all majors.
On another side note, there's always a possibility that the formation fails to deliver. However, a failed pattern is as good as the original plan because it clearly states that the market has chosen the opposite direction. A MACD bear divergence on the daily time frame points towards the 90.90. So the pair is clearly showing early signs of exhaustion and a major turnaround shall not be disregarded as probable.
On another side note, there's always a possibility that the formation fails to deliver. However, a failed pattern is as good as the original plan because it clearly states that the market has chosen the opposite direction. A MACD bear divergence on the daily time frame points towards the 90.90. So the pair is clearly showing early signs of exhaustion and a major turnaround shall not be disregarded as probable.
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