Stéphanie Aymes, Head of Technical Analysis at Societe Generale, notes that USD/JPY is on the verge of confirming a Head and Shoulder pattern, with a projected target for the pattern located at 106. Key Quotes "USD/JPY achieved last year the tipping point of 126.00 at the end of the sustained up trend from 2012 lows. In the process, the pair traced a massive ABC formation since 1995 lows (Elliot Waves principles) with up-moves each lasting three years, developing within a steep bullish channel and falling through at the long-term up channel resistance." "Historically, JPY has a tendency to reverse in a V-shaped formation which is this time completed by a Head and Shoulders pattern. Monthly indicator Stochastic has rejected the 20-year resistance (red horizontal line) then has given a negative crossover hence prompted a compelling long-term bearish signal." "Near term, USD/JPY is now flirting with the critical level of 116.00/115.50 which consists of the confirmation level of the broad Head and Shoulder pattern, which should act as a catalyst once broken (daily close required)." "The projected target for the pattern is located at 106, also the 38.2% retracement of the 2012-2015. Immediate support stands at 113.80/113.20, the 23.6% retracement and the lower boundary of the down sloping channel within which the pair has been evolving over the past months." For more information, read our latest forex news.