USD/JPY Forecast: Inverted bear flag signals potential for fresh sell-off

Omkar Godbole FXStreet Contributor

4-Hour chart

Support

111.55 (flag support)

111.26 (50-DMA)

110.23 (May 18 low)

109.87 (200-DMA)

Resistance

111.84 (10-DMA)

112.54 (100-MA on 4-hour)

113.00 (zero figure)

114.37 (May 10 high)

The loss of bullish momentum as indicated by the MACD and the breach of the rising trend line on the RSI suggests the spot is likely to see a downside break from the inverted flag pattern.
Inverted flag is a bearish continuation pattern, thus a downside break would indicate the sell-off from the high of 114.36 has resumed. The pair could revisit the recent low of 110.23.
On the higher side, only a break above 112.32 (falling trend line on 4-hour + flag resistance + 50% Fib R of June 2015 high – June 2016 low) would revive the bullish view and open doors for a revisit to 114.36 levels.
Also note, the daily RSI is struggling to rise above 50.00 (neutral level).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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