- The greenback bulls are likely to drive the asset higher on inverted head and shoulder formation.
- A bullish range shift in the momentum oscillator RSI (14) adds to the downside filters.
- The 10- and 20-period EMAs are scaling higher, which signals more gains ahead.
The USD/JPY pair has witnessed a rebound after a minor correction from its multi-year high of 129.41, printed on Wednesday. It won’t be wrong to claim that the asset has resumed its upward journey after a mild correction.
The formation of an Inverted Head and Shoulder chart formation on the monthly scale is indicating a strong upside move. An inverted head and shoulder formation denote a prolonged inventory distribution from institutional investors to retail participants. The greenback bulls are likely to test the neckline which is placed from October 2002 high at 125.68, adjoining the June 2015 high further.
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The 10- and 20-period Exponential Moving Averages (EMAs) at 116.90 and 113.53 respectively are scaling higher, which adds to the upside filters.
The Relative Strength Index (RSI) (14) is oscillating in a bullish range of 60.00-80.00, which strengthens the greenback bulls.
Should the asset test the above-mentioned chart pattern’s neckline at 125.68, the market participants may find it a value bet and will drive the asset towards the psychological resistance at 130.00, followed by the fiscal year 2002 high at 135.00.
On the flip side, yen bulls may dictate prices if the pair drop below December 2016 high at 118.66. This will drag the asset toward the 20-EMA and June 2020 high at 113.53 and 109.85 respectively.
USD/JPY monthly chart
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