The U.S. dollar fell hard against the Japanese yen on Tuesday. The move was the resolution of a complex head-and-shoulders pattern that played out in a nearly textbook fashion.

The pattern is clear on this hourly chart. The neckline comes in at about 92.22, depending on where you see the right shoulder. We see it as the first spike down, but if you measure it from the lower spike, the move targets even lower.

With our neckline, the measured target is 90.74, nearly exactly where the bottom has so far come. For those of you who aren’t familiar with technical analysis, the measured target is derived from mirroring the distance from the neckline to the top of the head and then projecting it lower.

Some traders like to try to trade the right shoulder of the pattern as a short, other like to wait for the neckline to break. Either way, you were looking at a 150 to 200 pip profit in a single day.

If you missed it, don’t expect to see a big rebound. A head-and-shoulders top often generates a major top and it could be some time before we see USD/JPY back above 93. Look to sell a rebound to the neckline as the weakness extends.

Fundamentally, it’s hard to see a reason for the yen to strengthen. Government officials there have done everything short of selling the currency in order to weaken it so we would be cautious with holding short positions in USD/JPY for too long.