Market reaction was minimal when the Bank of Japan left monetary policy unchanged today.
Even so, the yen has had a steep descent following news of an election in Japan leading to expectations of more “dovish” members being appointed to the BOJ. We’ve arrived at a situation where, the 4 hour USD: JPY chart is starting to shape up as a possible head and shoulder or similar reversal opportunity for swing traders.
It’s early days yet, the current rally could push a bit higher and still complete a right shoulder or price could waffle around for a while and turn this pattern into something more like a wedge or a triangle.
As things currently stand though, a clear break below the neck line would complete a head and shoulders pattern. This is the sort of set up that often interests swing traders looking for quick moves and operating with close stops.
Of course a strong move past the “head” would negate the possibility of a reversal pattern at this stage.
If we get a set-up, I’ll post some follow up thoughts on trading strategy.