Island Top In The Japanese Yen

The Japanese Yen has put in an island top formation which may indicate weakness for this currency in the days or even weeks to come. An island top occurs when the price gaps above the previous day's high for a number of days and then is confirmed when the price gaps down leaving everyone who got long stranded, thus the name island top.

The only problem I have with applying such a pattern to the Forex market is that the currencies trade 24 hours a day so theoretically there are no gaps. In any event I still consider the above technical pattern an indication that we may see a pullback here in the Japanese Yen so if you are long this market you may want to tighten up your trailing stop to lock in profits.