USDJPY Dollar/Yen Weekly Chart Technical Chart Patterns Negative Divergence Developing

Dollar/yen punches up through 114 at record highs not seen since December 2007. Banzai!! The dollar/yen chart is a technical pattern one-stop shop for any novice chart technician. During 2006-2007, into the October 2007 stock market top, the dollar/yen created a rising wedge pattern, was overbot, and negatively diverged, and received the expected smack down. From 2008 through 2011, the green falling wedge, oversold conditions and positive divergence forecasted the launch off the bottom which occurred.

In play now are the inverted head and shoulders (H&S) patterns. The white inverted H&S off the bottom is head at 75 and neck at 85 so 95 is the target that was attained. The pink inverted H&S with head at 75 and neckline at 95 targets 115. The dollar/yen just poked above 114 a short time ago so 115 may create strong overhead resistance. The brown inverted H&S is head at 75 neck line at one hundo so that targets 125. No doubt that many strategists boasting a 125 target are banking on this pattern.

As price moves higher a red rising wedge may develop. Note that over the last two years the indicators are negatively diverged already hinting that the move is tired. However, BOJ Governor Kuroda fired the QE money bazooka on Friday and there is upside momo so there will be a few weeks needed for the smoke to clear. In the very short term, a pull back of a week or few may be on tap but higher highs would be expected and 115 may serve as an upside target to end the year. At the rate the dollar/yen is rising that may comically occur today. The 118 resistance from 2007 may prove a much more formidable resistance level.

Analysts across the board are short the yen predicting dollar/yen prices of 120, 125, 130 and higher. The boat is fully loaded on the short yen side (higher dollar/yen).  If the 118 gives way the 125 will be on the table but not until then. If 118 occurs, 122 is likely as per Keystone's 80/20 rule where 8's typically lead to 2's. The expectation would be for dollar/yen to top out at 114.5-118.0 in November perhaps early December despite the obscene money-printing by the BOJ. 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.