- USD/JPY might have evolved a Broadening Formation price pattern.
- If so it could have bearish reversal potential and see prices fall substantially lower.
USD/JPY could still be in the process of forming a Broadening Formation pattern with bearish potential. If so, then it is likely to eventually decline towards the lower boundary line of the pattern at around 151.50. Following that, it could even break below that line and decline to the projected target for the Broadening Formation (BF), at around 148.54.
USD/JPY 4-hour Chart
USD/JPY has overshot the upper boundary line of the BF and this could either be a sign of exhaustion of the uptrend or a sign of bullishness.
It is possible, the pattern could be false and in that case, USD/JPY would still be in a strong medium-term uptrend. If so, given the technical analysis principle that “the trend is your friend” the odds would favor more upside.
In such a case, a break above 156.25 would likely confirm further gains towards a target at around 157.86 (July 19 high).
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