USDJPY: Technical setup paints a gloomy picture
After a bearish crossover of the 20 EMA below the 50 EMA in mid-November, USDJPY continues to plunge to head towards the long term 200 EMA. On the daily chart, we identify two bearish chart patterns that would signal further decline in the pair.
Firstly, USDJPY broke down from a bear pennant pattern on 24 November. This would set a downside technical target around 131.3 (S2). Secondly, a larger head and shoulders pattern that stretched back to September had also been completed and traders can expect USDJPY to slide further to test support as low as 126.4 (S3). In the event of a rebound, the head and shoulders neckline support-turned-resistance around 136.6 (R2) would likely cap further gains.
Firstly, USDJPY broke down from a bear pennant pattern on 24 November. This would set a downside technical target around 131.3 (S2). Secondly, a larger head and shoulders pattern that stretched back to September had also been completed and traders can expect USDJPY to slide further to test support as low as 126.4 (S3). In the event of a rebound, the head and shoulders neckline support-turned-resistance around 136.6 (R2) would likely cap further gains.
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