USDJPY BIG Head and Shoulders potential.

FX:USDJPY   U.S. Dollar / Japanese Yen
This is evident on the Daily TF as well. If the price makes it back to the neckline, I truly feel this will be a make or break level for the pair... If price breaks below the neckline I will be scalping short but very cautious of bounces as we have seen lots of buyers around this level. I do believe this will at least make it to the neckline. The peak of the right shoulder (119.55) also happens to be right at 0.5 Fib retracement of the latest down move from the 121.86 peak to 117.42 area and there was a hard bounce off that, so looks like a retest of neckline would be short term downtrend continuation move. Of course, price could always decide to move up to 120 first which could then become the new peak of the right shoulder which is why I suggest not acting on this yet... (I would love to see that actually, as we could potentially then have the right shoulder being made up of a head and shoulder pattern in itself! That would be lovely, and really help with downward momentum breaking the main neckline.)

For me to consider price breaking the neckline, price is not only going to have to break and hold the pink neckline, but also the 117. 40 level as that could just as easily be interpreted as the neckline for this pattern in my opinion. Even better, wait until 117.24 is broken as there is little support below this level. In addition... I want to see the brown diagonal trendline broken as that is channel support back from Oct 15th that has yet to be tested. Also, 116.875 may be minor resistance as it is a .764 retracement from mid July to Dec 7th rally. All these levels are likely to attract buyers, and prove to be formidable resistance. But, should price break and hold, I feel the bears will have won at least the 115.5 level as the first main target at the 0.618 Fib retracement level of the whole rally from Oct 15th to Dec 7th. I am very confident this will prove to be strong resistance. BUT, if this level breaks, then I see price heading to 113.8 (0.618 retrace of mid July to Dec 7th rally), possibly stretching to 113.525 area (0.5 retrace of Oct 15th to Dec 7th rally)

The 113.8 and 113.525 levels are of huge importance as it would appear to be game over if those levels were broken with price likely to fall all the way back to 109ish levels... One thing to note... H&S patterns often drop the distance from had to neckline which would put target at 112.65 area... Interestingly enough, there is a GAP juuuuuust below that at 112.56... If you are one of those people who believes those gaps are always filled, that might be your target ;)

Of course there are a lot of assumptions here... BUT I do feel this could be a great low risk trade set-up with lots of possible moves to catch. The lowest risk setup I could see would be after a break and hold of the initial levels I mention including 116.875... At that point, once those hold, One could short at 116.875 with a stop above either 117.42, or the neckline, or 118... Your pick. Initial target would be 115.50, followed by 113.8/113.5, possibly a 3rd target of 111.30 if you think the gap will fill.

Looking at Daily chart , there is still divergence in MACD , RSI , and Stochastic . Also... UJ has been mimicking the S&P500 (or S&P500 mimicking UJ). However, S&P500 has taken a much bigger hit these past few days than UJ has, which may point to UJ coming down... There is a lot going on in the market right now, big moves, lots of volatility , be careful out there! Please comment and thumbs up if you like. I would love any feedback, positive or negative, I welcome all options.