Several signs suggest that USDJPY is in the midst of a significant change of trend and will head back towards the 112.40 Spring high, according to David Sneddon and his team at Credit Suisse in London.

Sneddon notes that USDJPY has seen a large bullish “outside day” complete. It has also closed above its 200-day moving average at 109.03 and pushed above 109.29/37 on an intraday basis, which is both the August and October highs and 61.8% retracement of the April to August fall (see Chart). He is looking for a close above the August high at 109.37 to finally confirm a head-and-shoulders base. This would mark a significant change of trend higher with resistance then seen initially at the downtrend from November at 110.13, then 110.68/70.

Overall, Sneddon thinks the above scenario will eventually take the market back to the 112.40 high.

See Chart.