USD/JPY Dueling Trends

The Dow’s 289 point sell-off was seen in the USD/JPY as the pair
traded down through the 99.00 level and broke 98.00.  This morning
prices have found buyers to support 98.00 but the intraday downtrend
has formed a Continuation Channel Down on the 24 minute chart.
Trending pattern alerts such as this are excellent ways to wither play
the continuation of the trend or to play a reversal of the trend.  The
downtrend resistance line (green) is the decision level and will offer
1) the lowest risk entry for a swing short off resistance or if broken
will offer 2) a reversal breakout of the downtrend.  The more classic
channel down interpretation would also include a breakdown trigger if prices pierce the lower downtrend line which is support (blue).

A bigger picture scenario can also unfold if USD/JPY weakness persists and that is the breakdown on the daily chart.  The Continuation Rising Wedge on the daily has uptrend line support positioned near 97.00 and if the major psychological level is broken this would represent a short trigger and a reversal on the current (and weakening) uptrend on the end of day chart.  Notice the very low Initial Trend reading as it’s suggesting that the trend is not strong and making a better case for the uptrend line break entry.