USD/JPY Price Analysis: Eyes 134.00 on an H&S breakdown
|- A breakdown of the H&S formation has triggered a bearish reversal.
- The 200-EMA has acted as a major barricade for the US Dollar.
- A slippage inside the bearish range by the RSI (14) has activated bearish momentum.
The USD/JPY pair has witnessed a steep fall in Tokyo and has surrendered the round-level support of 139.00. The asset has sensed immense pressure as the US Dollar Index (DXY) is witnessing an intense sell-off. A sheer recovery in investors’ risk appetite has faded safe-haven’s appeal.
S&P500 futures have recovered losses recorded in the early Tokyo session as uncertainty over Federal Reserve (Fed)’s policy outlook has lost its traction. Meanwhile, the 10-year US Treasury yields have corrected to near 3.46% as a deceleration in the rate hike pace by the Fed looks imminent.
On an hourly scale, the major has delivered a breakdown of the Head and Shoulder chart pattern that signals a bearish reversal. A slippage below the neckline plotted from December 6 low at 135.96 has weighed on the US Dollar. Apart from that, the asset has been failing in holding itself above the 200-period Exponential Moving Average (EMA) at 137.10, which indicates strength in the Japanese yen.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which signifies that a bearish momentum has been triggered.
For further downside, the asset needs to drop below Friday’s low at 135.77, which will drag the pair toward the round-level support at 135.00, followed by December 5 low at 134.13.
Alternatively, a break above the 200-EMA around 137.00 will drive the asset towards Wednesday’s high at 137.86. A break above the latter will expose the pair for more upside toward November 25 high at 139.60.
USD/JPY hourly chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.