Keystone raises a blue megaphone towards his melon head proclaiming, "Now hear this, now hear this! Exercise caution ahead!" The yen is viewed as a safe haven so when the stock market is viewed as risk-off (stocks are sold off) the yen is strengthening which sends the dollar/yen pair lower. When it is a happy stock market day, traders shun the yen so the dollar/yen pair moves higher as it has in recent days as the SPX enjoys new record highs day after day.
Interestingly, the expansion pattern is now in play with price bouncing up and down each time touching the outside trend lines of the megaphone. The dollar/yen pair is at 110.08 right now on Thursday morning, 1/16/20. That is at the top of the blue trend line.
If you are a market bull, you expect the yen to be shunned going forward and for the dollar/yen pair to climb ever higher with the joyous US stock market. The megaphone pattern would be voided and thrown into the technical chart trash heap. The dollar/yen will then seek 111 and higher.
If you are a market bear, you expect the dollar/yen to receive a spankdown from the upper megaphone trend line. This may get quite ugly since price will want to seek the lower trend line way down at 107.50. Obviously, this drop in the USDJPY would correspond with the stock market tanking. The megaphone may be shouting a warning; is anyone listening?
So, choose your poison. Remember, other parameters such as the put/calls are at multi-year uber lows signaling off-the-charts complacency and euphoria. Will the megaphone be screaming bloody murder in a couple weeks or so? This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 5:13 PM EST: The Thursday session plays out with the dollar/yen pair trading at 110.14.
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