USD/JPY has extended its recovery. Nevertheless, economists at Credit Suisse view the current price action as a potential bearish “triangle” continuation pattern and they continue to look for the range to be eventually resolved lower.

“Triangle” consolidation phase may last a while

“We now look for further near-term strength in what is looking like the early stage of a potential ‘triangle’ continuation pattern. Resistance is seen next at 135.12, with tougher resistance expected at 136.67/137.30, which we look to cap.”

“Big picture, if we are correct and we are seeing the formation of a bearish ‘triangle’ this would suggest we should see an eventual break below 129.64 later in Q2 for a retest of the 127.53/23 YTD low and 50% retracement of the 2021/2022 uptrend. Whilst a fresh hold here should be allowed for, we look for an eventual break for a fall to support next at the 61.8% retracement at 121.44. We would also expect such a fall to be in line with a broader market ‘risk off’ phase.”