Is the USD/JPY breakout signaling a prelude to something? The chart looks like it might take on an unfavorable shape.

The dollar/yen is currently forming a long-term range, but I think it will break in one direction next year.

I don’t know yet which side it will break, but I want to share that the dollar/yen chart may take on a somewhat uneasy shape.

Dollar/yen is forming a head near the upper end of the range around 114.40, and near 113 yen the most recent candlestick has shown a rebound, forming a possible shoulder.

It’s a head and shoulders.

It often appears mainly in the lower or higher price ranges, and those points can become the starting point for a trend reversal, leading to a long-term trend.

This is just a possibility, but at this stage a head and shoulders seems likely to form.

If the rate closes below the November 27 low around 110.70, a neck line will form and the head and shoulders will be completed.

Even after it is completed, that does not necessarily mean a break of the range lower bound or a downtrend will occur.

However, once the head and shoulders is completed, that possibility becomes considerable.

Among traders who notice this chart pattern and anticipate a head and shoulders, many are likely to place sell orders near the shoulder around 113 yen.

If the lower bound of the range breaks, there is a possibility of a rapid move down to around 100 yen, so I think many people set profit targets in that region.

If you can anticipate such a slight possibility of this chart in advance, you will be considerably advantaged as a trader.


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