US Dollar vs Japanese Yen Forms Key Pennant Pattern within Bullish Trend

<p>USD/JPY (daily chart) as of December 5, 2012 has tentatively consolidated to form a pennant pattern. This technical chart formation occurs after the pair made […]</p>

USD/JPY (daily chart) as of December 5, 2012 has tentatively consolidated to form a pennant pattern. This technical chart formation occurs after the pair made substantial advances starting in mid-November. These advances broke out above the key 80.50 level to hit a seven-month high at 82.82, before retreating slightly in the form of the current pennant pattern. The pattern also occurs within the context of a strong bullish trend extending back to the September 77.12 low. Pennants can be considered trend continuation patterns if the requisite breakout occurs. In this instance of a bullish trend, if a breakout above the upper border of the pennant occurs, price could potentially move towards a re-test of the 84.00 area high, last reached in mid-March. The bottom border of the pennant resides around the 81.75 support region. Any significant breakdown below that area could invalidate the pennant formation and prompt a potential return to the key 80.50 level to the downside.

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