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USD/JPY: head-and-shoulders pattern threatens mini-reversal

   
The USD/JPY chart is actually looking surprisingly bearish after forming a head-and-shoulders pattern on the 4-hour chart.

The pattern is not perfect as volume should ideally be lower on the right shoulder but its still is quite compelling.

A break below the neckline at around 123.60 – including a 10 point margin of confirmation – so below 123.50 would probably see the pattern full-fill its down-side minimum price objective at 122.65.

Alternatively given the dominant up-trend and the fact the pattern does not exhibit weak volume, it may be a ‘fake’, as sometimes occur in the middle of strong trends. If this is the case then a break above the right shoulder at 124.55 would cancel it out and could lead to a short-covering rally to a target at 125.00.

Then after a break above 125.20 I would expect to see an extension of the trend to the R1 monthly pivot at 126.05.
USDJPY04

   
The USD/JPY chart is actually looking surprisingly bearish after forming a head-and-shoulders pattern on the 4-hour chart.

The pattern is not perfect as volume should ideally be lower on the right shoulder but its still is quite compelling.

A break below the neckline at around 123.60 – including a 10 point margin of confirmation – so below 123.50 would probably see the pattern full-fill its down-side minimum price objective at 122.65.

Alternatively given the dominant up-trend and the fact the pattern does not exhibit weak volume, it may be a ‘fake’, as sometimes occur in the middle of strong trends. If this is the case then a break above the right shoulder at 124.55 would cancel it out and could lead to a short-covering rally to a target at 125.00.

Then after a break above 125.20 I would expect to see an extension of the trend to the R1 monthly pivot at 126.05.
USDJPY04



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