Yen Gives Us Two Nice Flag Patterns

Daily charts of two JPY currency pairs now feature distinct bullish flag patterns that usually precede an uptrend continuation. The first pair is USD/JPY, where consolidation phase resembles a horizontal channel and is already 12 trading days long. The second pair is GBP/JPY. Its flag part is 13 trading days old and is tilted up significantly (which is a rather bad feature). A flag pattern is considered to be of a good quality when consolidation phase lasts at least three weeks before breaking out.
As you can see on the image below, the yellow lines mark the whole pattern — the flag and its pole. Cyan line is placed at 10% of flag’s width above the upper border since only bullish breakout is traded with this pattern. It marks the entry point. A green line is a probable profit target placed at the recent price peak.

You can also download my MetaTrader 4 chart template for this USD/JPY pattern.
The same colors are used for GBP/JPY. Yellow lines mark the pattern, while the cyan line is a breakout entry point. Green line is placed at 50% of flag pole’s height above as a rather conservative level for take-profit.

You can also download my MetaTrader 4 chart template for this GBP/JPY pattern.
In both cases, I would use the breakout bar’s low as the stop-loss for trading these patterns.
Update 2012-12-12 14:05 GMT: Both long positions entered at about 8:50 GMT today. USD/JPY entry was at 82.92 with SL at 82.48 and TP at 84.17. GBP/JPY entry was at 133.62 with SL at 132.84 and TP at 135.65.
Update 2012-12-12 7:28 GMT: Thanks to the huge weekend gap on JPY pairs, both USD/JPY and GBP/JPY positions were closed with profit today. Unfortunately, my broker decided to close them at the initial take-profit level despite the fact that the week’s opening was far above those levels. Well, do I need to switch my broker now?

If you have any questions or comments regarding these bullish flags on USD/JPY and GBP/JPY charts, please feel free to post them via the form below.

Leave a Reply

Your email address will not be published. Required fields are marked *