CAD/JPYââ,¬â€œ CAD/JPY continues to trade within the symmetrical triangle that began in early December 2005 at its 105.02 high.  The question that we ponder is whether this pattern is a reversal or continuation.  A recent positive 10, 20 day SMA cross on the daily favors longs.  A pair can remain in a triangle for quite a while, often as long as two-thirds to three-fourths of the length of the triangle.  With the apex of the triangle not until February 2007, the two-thirds to three-fourths dates put a potential breakout anywhere between 9/15/2006 and 10/20/2006.  This obviously suggests that volatility will contract.  So far, the resisting trendline as been decreasing by 7.3 pips per week and the supporting trendline has been increasing by 6.3 pips per week.  Immediate support is at the 38.2% fibo of 98.46-102.60 at 101.03.

CHF/JPY ââ,¬â€œ CHF/JPY trades at the upper end of its large ascending triangle on the daily.  Ascending triangles are typically bullish but the continued rejection of the pair at the upper end of the triangle along with negative divergence with oscillators on the daily is certainly disconcerting to bulls.  The proximity of the upward sloping resisting trendline on the daily limits risk to the upside but a break above the trendline targets 94.02 (88.88 + (1.618 * (90.87-87.67))).  As volatility continues to contract and the pair trades closer to the apex, the probability of a breakout increases. 

NZD/JPY ââ,¬â€œ The bounce off of the upper resisting trendline on 5/31 at 72.11 gives scope to another move down towards the 5/17 low of 68.19.  However, momentum to the downside is waning as evidenced by a positive 10, 20 day SMA cross yesterday.  A break above the resisting trendline on the daily (near the 6/2 high at 71.79) suggests that the rally from the 5/17 low of 68.19 to the 5/31 high of 72.11 was the first wave of a 3 wave corrective sequence.  Such a scenario would present a potential reversal play to the upside. 

Jamie Saettele is a Technical Currency Analyst for FXCM.