Another day, another ramp job. Will it stick this time? USDJPY is facing resistance at the red .618 and the red channel top (the channel within the white channel.) 
The red channel is the same slope as many past USDJPY sell-offs, including that of 2007-2008. So, it’ll be interesting to see if it holds.
If it can get back down to 101.74, it’ll complete the right shoulder of a rather large H&S Pattern targeting “ugly on a stick.”
Considering that the initial decline in USDJPY ushered in an 80-pt decline in SPX, it’s probably fair to say another like-sized decline in USDJPY would knock stocks back another 80 points or so.
Will the H&S play out? I think it’s fair to say TPTB will make a strong effort to defend the neckline. Extending it to the left, we can see it’s part of quite an important trend line.
It stopped the plunges in late 1999 and early 2005, then failed in 2008 — the fleeting bounce back above correlating with stocks’ Mar-May 2008 bounce from 1256 to 1440, and subsequent plunge to 666 Mar 2009. A failure to push above it in April 2009
USDJPY pushed slightly above it for a few days, but failed to hold it in May 2013. It peaked on May 22, as did SPX before plunging 100 points.
SPX recovered, of course, breaking above the trend line again on Dec 18 — the day which shall go down in history as one of the biggest and clumsiest plunge protection efforts ever. It was the day the FOMC announced the long-awaited and much feared taper. The PPT turned the initial plunge into a 43-pt gain — just missing the top 20 single day point gains of all time.
The futures — which, if you don’t know by now, is how the market is “managed” — pushed back above the 1.272 extension of the 2007-2009 crash (a critically important line in the sand in its own right) and didn’t look back. That 1.272 extension, by the way, is roughly the shoulder line on the ES H&S I’m tracking that points to another 84 points of downside.
Will it or won’t it? We’ll have to wait and see. A strong push above USDJPY 102.82 could encourage ES up to 1813 or so — fleshing out the larger right shoulder. While, a plunge back through the neckline at 101.75 should get things going to the downside.
Coming up, targets.