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MTrading Team • 2024-05-21

USDJPY confirms inverse head and shoulders during four-day uptrend

USDJPY confirms inverse head and shoulders during four-day uptrend

USDJPY rises to the highest level in a week while crossing a downward-sloping resistance line from late April, now immediate support near 156.10, amid a four-day winning streak early Tuesday. In doing so, the Yen pair confirms an inverse head and shoulders bullish chart pattern by extending the previous week’s rebound from the 200-SMA. It’s worth noting that the bullish MACD signals and an upward-sloping RSI (14) line, not overbought, also keep the pair buyers hopeful. With this, the quote approaches the mid-month peak surrounding 156.80 before challenging the monthly high of around 158.00. Following that, the 160.00 threshold, the yearly high of 160.20 and the year 1990 top of 160.40 can test the bulls during their run-up toward the theoretical target of the aforementioned inverse head and shoulders bullish formation, namely 162.50.

Meanwhile, the USDJPY pair’s retreat remains elusive unless breaking the neckline of the stated bullish chart formation, close to 156.10. In a case where the Yen pair drops beneath the 156.10 resistance-turned-support, it will defy the inverse head and shoulders and can quickly revisit the 200-SMA support of near 154.60. It should be observed, however, that the bullish bias remains intact as far as the pair stays beyond a two-month-old ascending support line, near 152.45 as we write.

Overall, the USDJPY pair braces for a fresh record high while confirming a bullish chart formation. Any pullback, backed by the downbeat US data and softer yields, remains unimportant until the pair exceeds 152.45.

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