USD/JPY takes first step lower

With a bear flag breakdown, the daily USD/JPY has taken the first step back to possibly testing the 80.00 decade level and setting up a continuation of the prior meandering downtrend in the pair.

8-8-2011 5-07-10 PM.jpg

The daily USD/JPY has broken down through the uptrend line support of a BEAR FLAG which is a pattern that resembles a wide, short channel up but has a tendency to forcast a reversal and a short trade.
Chart pattern alert courtesy of Autochartist.

Ideally a chart pattern like a bear flag will occur when a trend is taking a break or even correcting slightly. Consider the current environment: The USD/JPY has been trending lower but recently took a break and began to congest. This congestion allowed the bear flag to set up and sets up a continuation of the prior trend. This is also why the Autochartist alert defines this pattern as a Continuation pattern as well.

The 80.00 price level will now be the next test for short sellers and if the bearish momentum can trade through this major psychological level, look for an acceleration of the downtrend.