Hi all, please see this chart first, and press the "load new bars"/play button and see how it played out:
I recently took notice of such formations and have come to appreciate its usefulness.
RATIONALE:
When a pair trends in a certain direction, and such a formation forms, it usually indicates indecisiveness/loss in momentum of the prevailing trend,
because...
A bigger picture look of USDJPY from 2006-now has seen dramatic volatility due to divergences in monetary policy & global outlook, with the JPY correlating to safe haven flows in times of crisis and uncertainty.
From this analysis we can see that from 2006 - 2012:
There was a clear downward channel trending from a high of 124.14 to a low of 75.56.
From 2012...