the EUR/JPY monthly chart is building a lengthy contracting triangle chart pattern. But the pattern seems to be running out of space.
A breakout will therefore probably take place in 2021. Let’s review the wave and chart patterns.
The EUR/JPY has possibly completed an ABCDE (pink) triangle pattern at the most recent low. The 5 wave structure could break both ways:
Of course, there is always the chance that a triangle pattern could become extended. The wave C might prove to be unfinished. For now, the triangle pattern is reaching a point where a breakout is becoming more likely.
It is important to keep an eye on chart patterns on lower time frames once the breakout occurs. The appearance of reversal or continuation chart patterns could indicate whether the breakout has a chance of success. Or whether it will turn into a failed breakout pattern.