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CAD/JPY Double Top to Put an End to Its Minor Rally

May 6, 2018 (Last updated on May 9, 2018) by

CAD/JPY was trading in a strong downtrend since the beginning on the year, but that decline turned to a minor rally in mid-March. It entered a consolidation phase just less than a month later. The currently visible double top can serve as a reversal pattern to let the currency pair return to its long-term downtrend.

On the chart below, you can see the yellow lines marking the tops and the “neckline” of the double top formation. The cyan line will be my breakout entry level. It is placed at 10% of the pattern’s height below the “neckline.” My take-profit level is marked with the green line, which is positioned at 100% of the height below the “neckline”. I will set my stop-loss to the high of the breakout candle or to the high of the preceding one if the breakout candle appears to be mostly outside the formation. I will ignore upward breakouts from this double top pattern. You can click on the image below to see a full-size screenshot:

CAD/JPY - Double Top Pattern on Daily Chart as of 2018-05-06

I have built this chart using the ChannelPattern script. You can download my MetaTrader 4 chart template for this CAD/JPY pattern. You can trade it using my free Chart Pattern Helper EA.

Update 2018-05-08 15:07 GMT: The entry trade has triggered at 8:00 GMT today at 84.116. The stop-loss was set to 84.999 and the take-profit — to 82.779. Although the pullback after the breakout was significant, the currency pair is currently trading below the “neckline”:

CAD/JPY - Double Top Pattern on Daily Chart as of 2018-05-08 - Post-Entry Screenshot

Update 2018-05-09 11:52 GMT: The pullback turned out to be too strong and has hit my stop-loss half an hour ago:

CAD/JPY - Double Top Pattern on Daily Chart as of 2018-05-09 - Post-Exit Screenshot

If you have any questions or comments regarding this double top on the CAD/JPY chart, please feel free to submit them via the form below.

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