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USD/JPY: L/T Bearish Signal; Confirming Broad H&S Pattern –

Contrary to all the efforts of the BOJ, the yen is on a roll in a clear “risk off” environment. The team at SocGen examines the charts and sees interesting patterns:

Here is their view, courtesy of eFXnews:

USD/JPY achieved last year the tipping point of 126.00 at the end of the sustained up trend from 2012 lows, and in the process, the pair traced a massive ABC formation since 1995 lows (Elliot Waves principles) with up-moves each lasting three years, developing within a steep bullish channel and falling through at the long-term up channel resistance, notes SocGen.

Historically, JPY has a tendency to reverse in a V-shaped formation which is this time completed by a Head and Shoulders pattern. Monthly indicator Stochastic has rejected the 20-year resistance (red horizontal line) then has given a negative crossover hence prompted a compelling long-term bearish signal,” SocGen argues.

USDlPY monthly chart February 2016

 

Near term, SocGen notes that USD/JPY has just made a break below the critical level of 116.00/115.50 which consists of the confirmation level of the broad Head and Shoulder pattern, which should act as a catalyst especially after being confirmed with the daily close below this zone.

The projected target for the pattern is located at 106, also the 38.2% retracement of the 2012-2015.

Immediate support stands at 113.80/113.20, the 23.6% retracement and the lower boundary of the down sloping channel within which the pair has been evolving over the past months,” SocGen projects.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.