A large-scale head-and-shoulders reversal pattern is visible on the weekly USDJPY chart. This figure is characterized by significant growth over time. The left shoulder formed between 2013 and 2020, and the head has been developing for the past five years and is likely to continue for another two or three. This multi-year structure is outlined by a blue dotted line, while the head itself contains a similar, smaller pattern marked by a solid blue line. If the pair breaks decisively below 140.00 and 133.00 in the coming weeks, it will pave its way down to the round level of 100.00. There, the head will be complete, and the lengthy process of forming the right shoulder will begin. Right now, USDJPY is approaching its final climax ahead of a sharp decline toward 140.00—a phase expected to involve seller liquidation through a series of short squeezes. Once the majority of short positions are closed, the pair is poised to reverse and enter a sustained downtrend. The key level to watch is 140.00. A firm breakout below it will establish the next target at 133.00.
The ultimate recommendation is to sell USDJPY upon hitting 140.00. Profits are taken at 133.00. Stop loss is placed at 148.00.
The volume of your open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
