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Is USD/JPY creating a double top formation? [Video]

Melina Deltas, CFTe XM

USDJPY plunged below the 200-day simple moving average (SMA) once again after the climb towards the 137.90 resistance level, which is acting both as a significant resistance level and a possible double top pattern is in progress. The pullback below the 38.2% Fibonacci retracement level of the down leg from 151.90 to 127.25 at 136.66 is indicating the start of a consolidation area in the medium-term timeframe.

Technically, the RSI has found strong resistance near the 70 level and dropped lower again, while the stochastic oscillator posted a bearish crossover within its %K and %D lines in the overbought region, suggesting that more losses could come.

More declining movement could meet the 135.15 support ahead of the 20- and the 50-day SMAs at 134.20 and 132.95 respectively, which overlaps with the 23.6% Fibonacci of 132.95. Slightly lower, the uptrend line at 132.14 may halt bearish actions; however, steeper losses could change the outlook to neutral, hitting 130.60.

Otherwise, any successful attempts above the 137.90 barrier could open the way for a rally until the 50.0% Fibonacci of 139.60 and the 142.25 hurdle. Marginally higher, the 61.8% Fibonacci of 142.50 could be the next target.

All in all, USDJPY may give the green light for the start of a double top formation after the touch of the 137.90 level. Only a jump above the aforementioned mark could switch the outlook back to a bullish one.

Author

Melina Deltas, CFTe

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups.

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