USD/JPY Price Analysis: Tanks from five-week highs as a bearish-engulfing candle emerges

USD/JPY sinks 100 pips and is losing more than 0.70% due to mixed US economic data.
A bearish-engulfing candle pattern in the daily chart could pave the way for further losses.
The USD/JPY is trading below the 100-hour EMA, with sellers keeping the fort afloat.

Christian Borjon Valencia FXStreet

The USD/JPY plunges from weekly highs around 137.70 as US recession fears were fueled by mixed US economic data, dropping into contractionary territory, namely S&P Global Services and Composite PMIs, while the Manufacturing expanded. Nevertheless, traders took advantage of an overpriced US dollar and sent the major down. At the time of writing, the USD/JPY is trading at 136.39, below its opening price by 0.80%.

USD/JPY Price Analysis: Technical outlook

The daily chart shows that a bearish-engulfing candle pattern is emerging, which could pave the way for further losses. However, it’s worth noting that the pair tested the August 19 daily low at 135.71, but sellers could not hold buyers from reclaiming the 136.00 figure. Even though a bearish-engulfing candle pattern is bearish, sellers will face solid support at 135.71, followed by the 50-day EMA at 135.52.

The one-hour scale depicts that the USD/JPY broke below a confluence of the S1 daily pivot and a downslope trendline, exacerbating a fall towards the S3 pivot at 135.91, where USD buyers stepped in. Nevertheless, they’re facing resistance at the 100-hour EMA at 136,39, which, once cleared, could pave the way towards the 137.00 figure. Nonetheless, the most likely scenario is that the USD/JPY head downwards due to a confluence of the indicators tilting the pair as bearish,

Therefore, the USD/JPY first support will be the S3 pivot at 135-90. Break below will expose the August 7 high at 135.58, followed by the 200-hour EMA at 134.98.

USD/JPY Key Technical Levels

USD/JPY

Overview
Today last price	136.39
Today Daily Change	-1.10
Today Daily Change %	-0.80
Today daily open	137.47

Trends
Daily SMA20	134.5
Daily SMA50	135.54
Daily SMA100	132.12
Daily SMA200	123.91

Levels
Previous Daily High	137.65
Previous Daily Low	136.7
Previous Weekly High	137.23
Previous Weekly Low	132.56
Previous Monthly High	139.39
Previous Monthly Low	132.5
Daily Fibonacci 38.2%	137.29
Daily Fibonacci 61.8%	137.06
Daily Pivot Point S1	136.9
Daily Pivot Point S2	136.33
Daily Pivot Point S3	135.95
Daily Pivot Point R1	137.85
Daily Pivot Point R2	138.22
Daily Pivot Point R3	138.79

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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