Head And Shoulder Chart Pattern On USD/JPY Is Ominous

The USD/JPY has a classic head and shoulder pattern formation on the daily chart. It starts with the left shoulder in 2023, the head in 2024 and the right shoulder is completing in 2025.

For new investors to technical analysis, head and shoulder patterns are bearish. They trigger when the neckline breaks. Please note, as of now, the neckline has not broken. This means the pattern is still forming, but cannot be assumed to play out. Once the neckline breaks at 140, the calculated target is 118.

This type of drop would be like a major earthquake in the currency markets. It would mean the Yen is set to strengthen against the Dollar significantly.

This continues to point to the slow decline of the Dollar as the world's reserve currency.