NZDJPY has formed a descending channel. The descending channel is a price action that usually results in a breakout to the upside.
Though this classical pattern always is self-fulfilling, we may use another technique to confirm the breakout direction.
Whenever there is a channel formation, descending or ascending, a third line parallel to the channel can be drawn right across the middle of the channel.
The split channel is now used as a reference to analyze the amount of time the price action has been taking place, either in the upper or lower half of the channel.
If the price has spent a considerable time in a certain part of channel (upper half or lower half), then it confirms a breakout of the price in the side of the channel.
Therefore, the price on NZDJPY has spent a significant amount of time in the upper channel evidencing breakout to the upside.
The targets for such a breakout can be set which yields a high R - R ratio.
Target 1 can be placed from the breaking point at a distance equal to half the distance between the two channel lines with stops just below the mid-line of the channel.
And Target 2 can be trailed or placed at a distance equal to the length of the channel with stops just inside the top of the channel.
Though this classical pattern always is self-fulfilling, we may use another technique to confirm the breakout direction.
Whenever there is a channel formation, descending or ascending, a third line parallel to the channel can be drawn right across the middle of the channel.
The split channel is now used as a reference to analyze the amount of time the price action has been taking place, either in the upper or lower half of the channel.
If the price has spent a considerable time in a certain part of channel (upper half or lower half), then it confirms a breakout of the price in the side of the channel.
Therefore, the price on NZDJPY has spent a significant amount of time in the upper channel evidencing breakout to the upside.
The targets for such a breakout can be set which yields a high R - R ratio.
Target 1 can be placed from the breaking point at a distance equal to half the distance between the two channel lines with stops just below the mid-line of the channel.
And Target 2 can be trailed or placed at a distance equal to the length of the channel with stops just inside the top of the channel.