EURJPY Descending Triangle Trade Set Up:
The descending triangle formation is considered to be a bearish trend continuation pattern, indicating that the preceding downward trend movement is headed lower upon completion. By this descending triangle pattern it is assumed that the demand is less than the supply.
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This descending triangle pattern is formed by a flat support line and a descending resistance line. Additionally, forex traders look for a currency break to the downside and expect to resume the bearish trend.
Now we are seeing descending triangle pattern on EURJPY, breakout already occurred and now currently testing the flat resistance line. Any price reversal at this resistance line, might resume the current downtrend. We consider this as a pull back to the broken support line, which is resistance now.
In this case we will be looking for reversal candle to close with bearish outlook at the resistance line and look to go short with a stop above previous swing high, which would be conservative. This trade gives us 1:2 risk to reward ratio.
We will be looking for following targets 108.20, 107.00, 106.40